Start Saving Money from your First Paycheck

Linda J. Dodson

You’ve graduated from college, landed your first job: the temptation is real to spend every last cent of your first paycheck. However, you’re one paycheck closer to your retirement. Financial experts the world over, including the billionaire investor Warren Buffet, advise saving a percentage of your first paycheck to begin a savings habit as soon as possible. Saving a portion of each paycheck brings you closer to retiring – so read on for tips on how and where to invest your money.

Start by searching out platforms, companies, and financial institutions where you can save and invest. Put your money to work for you – and you will one day get to the point where you won’t need to work for money any longer. To Figure out more on this and to learn more about how to achieve this, the feedback and experiences of other people who have done what you aim for will give you the insight. Customers of companies such as SmartAsset’s products and investment plans will give you more ideas.

Drawing up a budget should be your first task. Work out your monthly living expenses and work those out according to your income. Stick to your budget no matter what so that you know exactly where your money is going each month. Work out the amount of money you can save – and if you can save a few extra dollars over and above that you’ll have more to invest with.

A 401(k) account is a smart move. If your employer offers one, see how much you can invest in your future. You can increase your contributions as your income grows too.

The golden rule of savings is to set aside one-third of your paycheck. While that might not be possible while you’re on your first job, aim to save as much as possible. You will be better positioned to ride out any financial crises too with a cushion of savings…

If you’re saving for college, start a 529 account. These are government-backed savings plans and offer tax-free growth. The benefits of a 529 plan are numerous and you getting a head start on saving for college helps lessen the burden of paying off your tuition fees.

If you’re making headway with your savings plans and sticking to your monthly budget, you can take advantage of the gains to be made from short-term investments. One that is fast-rising is cryptocurrencies. While it would be risky to place all your savings into one such investment plan, financial advisors do recommend buying into cryptocurrencies for short-term periods.

For longer-term investments, where a person can invest funds for 5 or more years, are Exchange-Traded Funds (ETFs). These are a collection of investment stocks that track the stock markets. The lower the risk, the better the longer-term outlook is for investors. ETFs offer that quality as their share price fluctuates over a period of time, but buying a broad index of individual stocks in a fund will see the collective fund grow in value over time.

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