As students, our concerns go far. From tuition, work and living expenses to graduating and getting our first job in our field of study. Unfortunately, the list will continue to grow after we graduate and start our young working lives in the working world. For those who will have student loans to repay, the future ahead can seem daunting.
Student debt is no joke and can be a huge burden as we move through life renting or buying a house, buying a car, and making other major purchases after graduation. So why not start preparing now, while we have time before everything goes down?
We may have a lot to do while we’re in college, but the time we have can be used to our advantage when we don’t have much under our belt yet. Investing your extra cash in savings accounts like an Individual Retirement Account (Roth IRA) or a High Yield Savings Account (HYSA) can jump-start your plan toward a nice and comfortable retirement. Alternatively, a certificate of deposit (CD) can help you save for short-term goals like a car or a down payment on a house.
A Roth IRA is an account you absolutely need for your retirement. Most employers will offer you a 401K, which is a great retirement plan and allows you to have a higher contribution, but a Roth IRA is tax-exempt. Once you retire and collect your savings on a 401K, taxes will be withheld, which means a lot of that money won’t be in your hands. The great thing about a Roth IRA is that you’ll pay taxes now and won’t have to worry about them when you’re ready to retire. Also, who knows what taxes will be like in 40 or 50 years.
HYSA are a great way to save money and are completely accessible. You can make withdrawals at any time, but of course you have limits like any other savings account. HYSA accounts will help you prepare for future goals and also help you in emergency situations. Some require you to have a specific balance, but most allow you to put in whatever your heart desires when you can. This is a perfect option for students who want to start their investment journey carefree, if not worry-free.
CD, on the other hand, are one of the safest investment accounts you can save in for your short-term goals. Buying a car, a house, or even paying off a lump sum of money for your student debt can be made easier in the near future with a CD. There will be a fixed amount required for a specific period of time, be it six months, a year or more. Whatever amount you can invest, you will get your money back, plus interest.
There’s so much information out there about the different types of savings accounts, and I don’t plan on bogging you down with it all. Financial shape can be confusing, and that’s why I love Financial Advisor Tori Dunlap. Dunlap has helped many people find financial freedom and comfort knowing they will retire carefree. She simplifies all that confusing information in a way that anyone can understand. On his website linked above, you can find several ways to help you find financial freedom, and even a message just for students.
Saving now while you have the time, the extra money, and the little debt in your name can give you the greatest edge in the game we call life. No matter how much you are able to invest right now, a little can go a long way. Don’t wait until you graduate and move on to the next chapter filled with major financial responsibilities – start now.