If you’re just beginning with that first serious job, there are steps you can take early on that can help set you and your family up for a stronger financial future.
Money saved is power — the power to tackle future emergencies, or send a child to college, or retire comfortably. Your biggest job during this early stage is to get into a habit of setting money aside for the future. It doesn’t have to be a lot: $25 a month is a good start. The sooner you do, the more your money has the potential to grow over time.
Everyone should enjoy the American Dream, but it’s critical you don’t let debt overwhelm you. Debt is expensive, and every dollar spent on interest is a lost savings opportunity. Of course, not all debt is bad. But debt is best used to help you acquire assets that have lasting value, like a home or a car that helps you get to a job.
In the early career stage, there are typically four investing goals you need to focus on. You’ll want some savings to cover unexpected emergencies. You might also be saving for a down payment on a house or a car. You may also want to set money aside for education or your retirement.
The best first step is to create an emergency savings account. This is money you would use to help cover your household costs in case of temporary unemployment, or to pay for a major household repair or unexpected medical bills.
It’s never too early to start planning for retirement. Tax-deferred retirement accounts — such as a 401(k) or an Individual Retirement Account — provide tax benefits that can really help your retirement savings grow.
If you already have children, or want to go back to school yourself, there are tax-advantaged accounts specifically to help you pay for education. Getting an early start will help you cover those future costs.
If you open an account with Homestead Funds, our Automatic Investing Program allows you to start investing right away with no minimum amount required. You choose an amount and it’s deducted automatically — directly from your paycheck or bank account — as often as you like, such as monthly, quarterly or every payday.