3 pieces of financial Advice for women in their 20’s
I’ve been a financial advisor for the past four years, and I’ve worked with many young women who are trying to navigate the tricky waters of their 20s. There are so many decisions to make when it comes to money, but I hope that these three pieces of advice will help you get started on your journey toward financial independence:
Start contributing to a 401(k)
The first piece of advice is to start contributing to a 401(k) as soon as possible. This is one of the best ways to save for retirement. Your contributions are tax-deferred, meaning you don’t pay taxes on the money until you withdraw it in retirement.
If your employer offers an employer match, then contribute enough so that your total contribution would be enough for them to match it (that way, it’s essentially free). If they don’t offer a match, then make sure that you’re contributing at least enough yourself so that when you get older and your salary increases (which is likely), then the amount that goes into your account will still add up each year with interest earned off of those funds.
Set up an emergency fund.
An emergency fund is a great way to prepare yourself for the unexpected. If you do not have an emergency fund, it’s important to set one up immediately. Once you have saved up at least three months of living expenses in your savings account, then congratulations! You are now ready for anything that may come your way—whether it be a car breakdown or a sudden job loss.
Compound interest can work for you.
You’re young, you have plenty of time to save money, and now is the perfect time for you to start. Compound interest is a powerful tool that can work for your benefit if used effectively. It’s not difficult to understand how compound interest works; it simply means that your interest earns itself more interest over time, thus increasing its value. The earlier in life you start using this tool, the more quickly it will grow and multiply exponentially with each passing year.
It’s no secret that many people don’t begin investing until their 30s or 40s because they feel there isn’t enough time left in their lives before retirement hits them full force—but what if I told you this could be wrong? Consider this example: If someone invested $100 per month at age 25 (not an unreasonable amount), they would have approximately $982K when they hit 60 years old! They could retire a millionaire by following these simple steps:
- Open an investment account with Vanguard or any other reputable company.
- Set up automatic contributions every paycheck into that account so as not to miss out on one single paycheck (I know sometimes life happens). Some employers offer 401k plans which may require some extra forms but are worth looking into as well! Maybe even ask HR about contributing matching funds! It’ll help boost those returns even further down the road 🙂
Don’t be scared, it’s magical and fun.
To start off, you shouldn’t be scared of making money. It’s not scary or even difficult, it’s actually magical and fun, just like your twenties should be!
It’s not that hard. You can do it, and I believe you can do it well. Remember these three points: start saving, set up an emergency fund, and compound interest will work for you if you let it. It’s not just about money; being financially prepared for life means being able to live your best life now!
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