As students, our worries range far and wide. From classes, work and living expenses, to graduating and gaining our first job within our field of study. Unfortunately, the list will continue to grow after we graduate and begin our young professional lives in the working world. For those who will have student loans to repay, the future lying ahead may seem daunting.
Student debt is no joke, and can be a heavy burden when we are moving forward in our lives by renting or purchasing a home, buying a car and making other major purchases post-graduation. So why not begin preparing now, while we have the time before it all hits the fan?
We may have a lot going on while we’re in college, but the time we have can be used to our advantage while we don’t have much to our name yet. Investing your extra cash in savings accounts like an individual retirement account (Roth IRA) or a high yield savings account (HYSA) can jumpstart your plan to a nice, cushy 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 definitely need for 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 free. Once you retire and gather your savings from a 401K, taxes will be taken out, meaning a lot of that cash will not be in your hands. The great thing about a Roth IRA is that you will be paying taxes now and won’t have to worry about it when you are ready to retire. Plus, who knows what taxes will be 40 or 50 years from now.
HYSAs are a great way to save money and are completely accessible. You can make withdrawals at any time, but of course have limits just like any other savings account. HYSA accounts will help you prepare for future goals and also help in emergency situations. Some require you to have a specific balance, but most allow you to put whatever your heart desires when you are able to. This is a perfect option for college students to begin their investment journey with little to no worries.
CDs, on the other hand, are one of the safest investment accounts in which you can save for your short term goals. Buying a car, house or even dropping a lump sum of money towards 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, whether it may be six months, a year or more. Whatever amount you may invest, you will get back — plus interest.
There is so much information regarding the different types of savings accounts, and I don’t plan on bogging you down with it all. Financial fitness can be confusing, and that’s why I love financial advisor Tori Dunlap. Dunlap has helped a lot of people find financial freedom and comfort knowing they will retire without worries. She simplifies all of this confusing information in a way anyone can understand. On her website linked above, you can find multiple ways to help you find financial freedom, and even a post just for college students.
Saving now while you have the time, the extra cash and little debt to your name can give you the biggest advantage to the game we call life. No matter the amount you are able to invest right now, a little can go a long way. Don’t wait until after you have graduated and are moving on to the next chapter filled with major financial responsibilities — start now.
