As a recent graduate, you may be focusing your sights on the future, whether it’s planning for further education, jump starting your career, or traveling. However you decide to enjoy your freedom, it’s important to start considering your future finances. Although finances may not be an immediate concern, planning for the future and saving early can significantly increase your opportunity for financial freedom later. The following points are reasons you should start saving as a young adult:
Establish good habits
As you continuously start to save, you are establishing a beneficial habit. Setting aside money may seem like a chore, but as it becomes habitual you will start to see the growth and the long-term benefits of saving.
Take advantage of the time value of money
Investing your money can also be a form of savings. When you invest, you can earn more money from the money you put away as time progresses. Depending on your annual return, you can earn a significant amount. Say you invest $500 per month with an annual return of 7%. Your account will be worth over $250,000 over twenty years.
As you develop a habit of savings, you are giving yourself a future with more options. With more saved money, you have greater opportunities to pursue hobbies, travel, and live a lifestyle that reflects what you really want. It can also give you a safety net during future transitional stages. For example, if you decide on a career change in the future, you will have savings that you can fall back on during times of unemployment.
Get a head start on retirement
Depending on how much you can save in early adulthood, you have the potential to retire early. Saving aggressively can give you the option and leeway to retire at an early age, even if you don’t have to.
For more tips on how to save time and money, contact our team at Bakersmith Bookkeeping Group. Find additional information on finance-related topics with more blogs on our website.