This summer, we’ll see a wave of newly graduated high school and college students who are ready to take on the world and dive deep into promising careers. It’s a golden time of opportunity and, ideally, fun. But it’s also a delicate time. The financial decisions and actions you make now can set you up for success — or failure.
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What money moves should you prioritize making early in your career? GOBankingRates spoke with two financial experts to find out. These are the top four smart money moves that you’ve got to make — and soon.
Build an Emergency Fund
First things first: Get that emergency fund built up. Financial experts have differing views on how much you should keep in a readily accessible emergency fund. Chad Gammon, CFP, Custom Fit Financial, recommended having at least three to six months of expenses on hand.
“You do not want to rely on credit cards for emergencies,” Gammon said. “This will help you out later on when something unexpected happens and helps give you peace of mind.”
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Contribute To a Retirement Plan
If your employer offers a 401(k) plan, you have to sign up. Forty-one percent of companies that offer a 401(k) plan match up to 6% of employees’ salaries — with some companies offering even more. Do not pass up this opportunity.
“See if your employer has a match and try to at least contribute to that amount,” Gammon said. “The employer match is like getting free money. The compound interest these investments make over your career will help you later for retirement.”
Even if your employer doesn’t offer a match, you must invest in a retirement plan. If a 401(k) plan is not an option, then open an IRA on your own.
Set Up Wise Investments
Don’t delay on investing, even if you’ve not got a lot of room in your budget. Time is heavily on your side here. As you advance in your career and earn more money, you should get more aggressive with your investing practice.
“Can you invest more in your retirement plans or outside in other investments?” Gammon said.
Practice Financial Discipline
Now is the time to form excellent money habits. Bad behaviors are tough to break, especially as we age, so get into the mode of frugal, disciplined living ASAP. Get into the habit of paying down your student loan debts and banishing credit card debt.
“Learn to make financial discipline a lifestyle by pausing to consider the pros and cons of your spending and asking self-assessment questions like, ‘Can I afford this?’; ‘How will this purchase impact my savings and investment goals?’ and ‘Does this purchase have a lasting value?'” said Aaron Razon, a personal finance expert at Coupon Snake. “Making financial discipline a habit right from the start of your career helps you build resistance to impulsive spending, lifestyle inflation and other costly financial habits, and this helps you stay focused on your financial goals and guarantees your financial freedom in the future.”
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This article originally appeared on GOBankingRates.com: 4 Smart Money Moves To Make Early in Your Career
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