Five Points Bank Blog
Young Adults Should Start Saving for the Short and Long Term Now
When you first start working, the paths to your financial goals can be anywhere from a few months to several decades down the road, so it’s a perfect time to start saving and investing for the future.
In the short term, you should be setting aside money for goals such as buying a car or house, as well as building an emergency fund that can sustain you in case of a job loss or an unexpected expense. You’ll want short-term money that is easily accessible in something like a regular savings account or a CD at your financial institution.
For long-term goals, investing can set you up for retirement years down the road.
Investing can include things like 401(k) or 403(b) plans through your employer, as well as contributions to traditional and Roth IRAs. These investments, which often include mutual funds, or Exchange-Traded Funds (also called ETFs), are collections of stocks and bonds that give you a chance to choose your level of risk when it comes to returns on your investments.
Keep in mind that many employers that offer retirement accounts will also match your payroll contributions up to a certain percentage, which is like getting some free money to invest as you see fit.
Before beginning any major savings strategies, you should look at debts you might have and consider paying those with the highest interest first. You don’t want to be paying more in interest than you’re earning in savings.
Working with a financial planner can help you set solid short- and long-term goals that can leave you ready for all your saving needs – and the sooner you get started, the better off you will be.