5 Most Common Money Traps To Avoid
Saving is a way to accumulate money for future needs. Of this, 25-35% should be for home loan repayment and the rest for other forms of debt, including car and credit card loan. That money should go to investments or savings (or at least a portion of it should). So, by starting your retirement planning early, you not only get to generate considerably higher returns until the time you retire but are also able to reduce your tax burden.
Rather than borrowing money to pay for the wedding, it would be more prudent to save towards a reasonably priced wedding even if it means delaying the wedding for a year or two. Evaluate your current income and future financial goals to figure out what you need, says Tracy St. John, a financial advisor and founder of Financial Avenues LLC in Kansas City, Missouri.
If you won't be making a lot of money, you may have a harder time paying back your student loan debt. Make your expectations clear from the start, and you will avoid a lot of fights over money in the years to come. We even did a whole Run The Money Guide To Retirement that shows you what you be saving by age.
If you begin investing at the outset of your career, you have a very long investment timeline and should avoid being too conservative in your approach to long-term investing. For example, if you notice that you spend a large chunk of your monthly income on takeaways and restaurants you may decide to assign less money to that area and put the savings towards your emergency fund or other saving and investment pots.
I mindlessly spent money on credit and only paid the minimum that was asked of me. A couple of years later, those balances were essentially the same, while my bills and other responsibilities started to pile up. Because the longer you wait to save for retirement, the less time you'll have to take advantage of the beauty of compound interest.
Think of it like this: if you take home $1,000 in income, but spend half on a house, you only have about $33 a day to pay for all the Stock market rest of your expenses - not to mention saving for upcoming purchases or investments. You know that it's time to shift your focus from the party life and start building a sound financial life.