Don’t Wait to Get Started – YOU CAN DO IT! IT’S EASIER THAN YOU THINK.
No one is born knowing how to save or to invest. Every successful investor starts with the basics.
As a student, you may think that saving and investing is something you do not need to consider right now. But there’s a cost to waiting, and even saving a little now can add up over time and help you pay for your short and long-term goals.
KEYS TO FINANCIAL SUCCESS
- Make a financial plan.
- Create a budget.
- Start saving and investing as soon as you have paid off your debts.
What are the things you want to save and invest for?
- Make a list of goals and then think about which goals are the most important to you. Decide how many years you have to meet each specific goal.
Know your current financial situation.
- Take an honest look at your entire financial situation.
- You will need to figure out on paper your current situation – what you own and what you owe.
- Keep track of your income and your expenses for every month.
- Pay yourself first. Anytime you have automatic deductions from your paycheck or credit union/bank account, you’ll increase the chances of being able to stick to your plan and realize your goals.
Small Savings Add Up to Big Money
How much does a bottle of soda cost you?
If you buy a bottle of soda every day for $2.00, that adds up to $730.00 a year. If you saved that $730.00 for just one year and put it into a savings account or investment that earns 5% a year, it would grow to $931.69 after 5 years and grow to $3,155.02 after 30 years.
That is the power of compounding. With compound interest, you earn interest on the money you save and the on the interest that money earns. Over time, even a small amount saved can add up to big money.
If you are willing to watch what you spend and look for little ways to save on a regular schedule, you can make money grow. You just did it with one bottle of soda.
If a bottle of soda can make such a huge difference, start looking at how you could make your money grown if you decided to spend less on other things and save those extra dollars.
If you buy on impulse, make a rule that you’ll always wait 24 hours to buy anything. You may lose your desire to buy it after a day. And try emptying your pockets and wallet of spare change at the end of each day and put that money aside. You’ll be surprised how quickly those nickels and dimes add up!
PAY OFF CREDIT CARD OR OTHER HIGH INTEREST DEBT – Speaking of things adding up, few investment strategies pay off as well as, or with less risk than, merely paying off all high interest debt you may have.
Many people have credit cards, some of which they’ve maxed out. Credit cards can make it seem easy to buy expensive things when you don’t have the cash in your pocket – or in the bank. But credit cards are not free money.
Most credit cards charge high interest rates – as much as 18% or more – if you don’t pay off your balance in full each month. If you owe money on your credit cards, the wisest things you can do is pay off the balance in full as quickly as possible. Virtually no investment will give you the high returns you’ll need to keep pace with an 18% interest charge. That’s why you’re better off eliminating all credit card debt before investing savings.
- Put Away the Plastic
- Know What You Owe
- Pay Off the Card with the Highest Rate
Making Money Grow – there are two ways to make money. Sometimes your money can do both at the same time – earn a steady paycheck and increase in value.
- You work for money.
- Your money works for you.
- Your money earns money.
- You buy something with your money that could increase in value.
THE DEFFERENCE BETWEEN SAVINGS AND INVESTING
Your savings are usually put into the safest places, or products, that allow you access to your money at any time. There is a tradeoff for security and ready availability. Your money is paid a low wage as it works for you.
When you invest, you have a greater chance of losing your money than when you save. You could lose your principal – the amount you invested. But you also have the opportunity to earn more money. When you make an investment, you are giving your money to a company or enterprise, hoping that it will be successful and pay you back with even more money.
ASK QUESTIONS!
Many people hire an investment professional to assist in selecting investments. You can never ask a dumb question about your investments and the people who help you choose them, especially when it comes to how much you will be paying for any investment, both in upfront costs and ongoing management fees.