What steps can I take to have a secure financial future?

I am 18 and currently a student enrolled in college. I would like to know what are some important steps to take as I get older to ensure a good financial future? What can or should I be doing with my money? What are some important factors that can affect me? What should I avoid? What should I do as I get older?

Personal Finance, Investing, Starting Out
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December 2015
83% of people found this answer helpful

You’ve asked about important steps about securing your financial future. In fact, you’ve actually taken the most important step: the first one. By starting to ask these questions and think about your future, you’ve already begun the process of ensuring a lifetime of financial security. As a student, likely with little to no current income, you should first put together a monthly budget. If you have current income, it’s ideal (though certainly not always possible while in college) to begin to set aside some savings. Regardless, it’s wise to get in the habit of creating and following a monthly budget. When you get a job after school, you’ll already be better prepared to manage and monitor your income and spending while setting aside a certain percentage for savings.

If you have student loans, starting to save now will give you a leg up as you begin to pay off the debt after college. During college, students commonly make the mistake of incurring significant debt that becomes a burden as you start your career. Specifically, credit cards debt mounts faster than you think, and high interest rates can make the problem worse. Also, don’t go out and spend money on big ticket items that only depreciate in value. The new car may look cool on campus, but might really hurt your bottom line. Sticking to a realistic budget can help to avoid these pitfalls. Spend within your means and you’ll be on the right track.

As you enter the workforce, the general goal of saving as much as possible continues. A 401(k) plan, if offered by an employer, is a great tool to start to build your retirement savings at an early age. As you start to earn more and have a clearer picture of your future goals, you should spend time with a financial advisor to determine what other financial planning strategies are best for you.  

August 2016
August 2016