Whether you’re a workaholic putting in yet another twelve-hour shift, a student striving toward your bachelor’s, or an expecting parent, the monetary investments you put into your rainy day fund, savings account, or stock investments can go a long way in securing a financially stable future for yourself and your family. But how much should you be putting away, and what investments are the best options for you? We crunched the numbers and have the answers below!
- Focus on paying off credit cards and loans first, with priority given to those with the highest interest rates. Paying off this debt allows you to instead utilize those interest payments toward investment and savings opportunities.
- Take inventory of your current income and expenditures. What bills can be lowered? What can be removed entirely? While that $10 gym membership you hardly use may not seem like a large monthly cost, over the course of a year, that membership adds up to $120. Over a ten-year span, that adds up to $1,200. Are you really making the membership work for you?
- Once you have completed your list of income and expenditures, schedule an appointment with a local investment firm to discuss what percentage of your remaining balance should be utilized for savings and investments, and how much you should be funding into your 401k if the opportunity is available with your current employer. Even if that savings is only $50 per month, put it away the moment you cash out. In 25 years, that $50 will have grown to $15,000.
- When preparing your taxes, consider whether you should take a standard or itemized deduction. Compared to your standard deduction, an itemized one benefits those who have made significant contributions to charities, have rather large, unreimbursed expenses as an employee, or paid mortgage interest and real estate taxes on their house. Uninsured flood, fire, or theft losses can also be covered in an itemized deduction.
- After you’ve received your tax return, invest your return in a savings account, to ensure that you have money left over for any emergencies that might occur down the road. With a “rainy day” fund, a tire blowout, or midnight trip to the E.R. won’t break the bank, forcing you to rely on your credit cards.
By focusing on removing credit card debt, taking inventory of expenditures, properly investing with professional assistance, and making your tax return work for you, your wallet and family will stay in top form!