Investing for Life’s Milestones: Spending money now to benefit your future
No matter what your plans are for your life, you don’t want money to get in the way of achieving your goals. As such, you may want to consider investing your money during each stage of your life to make your aspirations are more attainable.
Going to school
Saving money for your education can be difficult, especially if you intend to continue your schooling right after high school. However, Kevin Voigt, a staff writer at NerdWallet, recommends that in addition to setting aside spare cash for your postsecondary education, you should set up a 529 college savings plan. While 529 plans are typically set up by parents, you can start one yourself to further your schooling later on in life. You can also ask your friends and family members to give you cash instead of gifts for your birthday or other special occasions so you can put that money towards your 529 fund.
Starting a job
Once you have your first job out of school, you may want to invest in a 401(k) plan to save money for your retirement. According to Carol M. Kopp, contributor to Investopedia, many employers will match your investment in a 401(k) plan, so you should at least pay the minimum amount that makes you eligible for a full employer match. Kopp also advises diversifying your investments by selecting different bonds and stocks in order to protect against a potential downturn. If you are self-employed as an independent contractor or sole proprietor, Ana Maria Martinetti-Katz, contributor to Investopedia, says you can select a solo 401(k) instead.
If you decide to get married, your investment plan then becomes something to discuss with your partner. Rebecca Lake, the Financial Planning expert for The Balance, recommends having open communication and shared goals for your investments in stocks, bonds and mutual funds. If one spouse is not working, they can also invest in a spousal IRA so they can save for retirement. According to Martinetti-Katz, as long as the working spouse’s compensation is taxable, the nonworking spouse can contribute up to $6,000, while those over 50 years old can contribute up to $7,000.
You may find that your expenses greatly increase if you have children, and that your income decreases if you or your spouse leaves work to care for the children, according to Lake. Henceforth, if you have children, you may need to adjust your financial plans and add to your emergency fund. Lake also suggests setting up a college savings plan for your children as soon as possible. As Voigt says, even if you need to start small, investing in your children’s education from birth can be helpful later on. Once they’re older, your children can start applying for scholarships and FAFSA to assist with college tuition, as well.
Investing throughout your life can make it easier to turn your future aspirations into reality. Before you start planning for your next milestone in life, be sure to speak with a financial advisor about which investments are right for you.
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Police FCU offers many great options to help you save for specific goals, including sub-share accounts and higher dividend time deposit accounts for maintaining your savings and reaching your financial goals. Ask a representative how we can help by calling 301-817-1200.
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