If you recently graduated from college or high school, there are some important decisions ahead of you. Many of these decisions do not necessarily have right or wrong answers, so it is okay if you are not sure whether or not you picked the “right” answer.
Don’t worry about knowing the tax rules. TurboTax Live lets you connect with real tax professionals, or CPAs, to help you with your taxes – or even handle them for you. Get unlimited tax advice right on your screen from live tax experts while you deal with your taxes, or let it do it all for you – from start to finish. In this way, you can expand your tax knowledge and understanding and be 100% sure that your return is guaranteed to be correct.
However, one good decision you can make is to save for the future. Whether you can save a little or a lot, saving now can help you secure your financial freedom later.
Here are some reasons why you should start saving now:
Saving becomes a habit
One of the best things you can do is start saving money right after you graduate so it can become a habit.
Why should you make a habit of saving money? Saving money is like dieting, except it has to do with money, not food. While there is a certain sacrifice element, the sooner you overcome this hurdle, the easier it will be. At some point, you will no longer consider saving a victim, especially as you begin to experience the benefits of being cash rich.
The time value of money
In the event of an emergency or temporary loss of income, it is important to have a certain level of savings.
However, the real payoff for saving money is in investing it. This gives you the opportunity to “work your money for you”. That’s another way of saying that the money you save will make even more money.
For example, let’s say you save enough money in an emergency fund to cover the cost of living for at least three months. You then invest the rest. If you can invest $ 500 a month and get an average annual return of 7% on a portfolio of stocks and bonds, your account will be worth over $ 250,000 for 20 years even though you’re only investing $ 120,000 had to.
Additionally, you don’t have to know a lot about investing to actually invest. There are automated online investment platforms called robo-advisors who can create a portfolio for you and do all of the investment management – all you have to do is deposit money into your account. Each offers professional investment management services for an average fee of around 0.25% per year.
If you’ve already started investing in stocks and happened to sell some stocks this year or are considering selling, check out our Capital Gains Calculator to see how much you will be taxed whether you are in less than sell for a year or hold your stock for more than a year. To save money and help you with your tax planning for the 2021 tax year, you can also find out whether you have a capital gain or loss and compare your tax results of a short-term with a long-term capital gain, whether you have already sold or you are considering Sell your stock.
Get every deduction you deserve. With TurboTax Deluxe, we search over 350 tax deductions and credits so you are guaranteed your maximum refund. It’s free to start and receive a $ 10 discount on TurboTax Deluxe when you submit it.
Create future options
You likely have certain goals that you want to achieve early in life. It can have something to do with traveling, with certain life experiences or a certain lifestyle. However, you don’t always know how your goals and preferences will change over the course of life.
If you are financially constrained by high debt and low savings, your future options may be limited. But once you get into the habit of saving and building a strong savings base along with a low-debt lifestyle, you will be better able to pursue your dreams and goals in the future.
Everything in life – including certain choices and lifestyles – requires money. The more you can save, the easier it is to turn these decisions into reality.
For example, although you are quite happy with your current job, you might opt for a different direction in the future. You might decide to switch careers, start your own business, or even take some time off to explore the world. Each of these big life changes are easier to make when you have a safety net of savings.
Take a leap into retirement provision
You may already be familiar with a movement commonly known as “FIRE” – financial independence, early retirement. It has become an amazing trend lately, and there are many stories of people who saved aggressively and withdrew in their thirties or forties. Even if you don’t plan on retiring early, you can learn from their experiences.
By saving aggressively and investing wisely, you can amass a nest egg that will give you the opportunity to retire early. While you don’t have to retire early, the option gives you flexibility.
In addition, investing in your retirement can help you lower your tax burden through tax-deductible contributions to an employer-provided retirement plan, tax-deductible contributions to an IRA, and the saver’s credit you may only get for investing in your retirement.
Don’t worry about mastering your savings. While these tips will hopefully help you feel more confident, ultimately you have to do what you are comfortable with and save what fits your budget. The Mint app can also help you track your expenses and offer tips on how to save.