If you are on the threshold of starting your career, your first responsibility may be to start paying off an educational loan you took while at college or clearing your credit card dues. You may also be thinking of keeping aside a portion of your present salary and investing it in a lucrative investment scheme. After all, you may want to buy the latest automobile or a place of own in the near future. Even planning to live a financially secure life when you retire may be on your mind. Andrew Corbman, a prominent financial adviser from Ashburn and the founder of ASC Financial, Inc., young people need to first prioritize their debts and begin saving for their future. He recommends that take the following steps to achieve this important objective:
- Formulate a budget
This finance graduate from the University of Maryland says the first thing you need to do is formulate a feasible budget. This is the first task you need to do before thinking of paying off existing debts, saving money for the near future and making certain lavish purchases. While chalking out your budget, you need to consider certain important factors like present salary, monthly expenses and outstanding debts you need to start paying off. If you still think you may have money left after this exercise, you need to think of ways to spend it wisely in a lucrative investment scheme.
- Create an emergency fund
Next, you need to create a suitable emergency fund for yourself before begin paying off your outstanding debts. Andrew Corbman explains that planning of unforeseen expenses is essential since it can have serious financial implications because the future is unpredictable. Ideally, you need to keep aside an amount equivalent to six months of your present salary for such circumstances. You can open a separate bank account for this purpose or enroll in compulsory payroll deduction, if your present employer has such a scheme.
- Enroll in your employer’s 401(K) retirement plan
If your employer has a tax-advantage account scheme like 401(K) or 403(B) for his employees, you need to enroll and make the necessary contributions as soon as you receive your salary. This is one of the most vital components of your retirement investment plans although you may not be able to realize this in your present circumstances. It is also the most prudent way to lawfully protect yourself from paying additional taxes so that you retain the money you work so hard to earn when you retire.
- Invest your excess money in a lucrative retirement investment scheme
If you have undertaken the above important steps and still have some money left, it is prudent on your part to invest this amount in a lucrative retirement investment scheme. Every year, use an online tax calculator to estimate your tax refund and figure out how best to invest it. This is because as you become older you may feel that your 401(K) or 403(B) contributions are not enough to ensure you live a financially secure life when you retire. By investing the excess money, you have left after paying off your mandatory expenses in such a scheme can go a long way in covering this shortfall.
Andrew Corbman says following the following steps can save you from into any financial debt while saving enough money for your retirement years. When you follow them, you do not have to worry about retirement in your later years.