If you're a young adult facing the tangle of covering expenses, managing student loan debt and planning for the future, you may be wondering: Where do I start?
One Step at a Time
Reaching your financial goals is achievable – if you take one step at a time. Everyone's situation is different, but the following steps could lead to a sound financial foundation – now and in the future.
Examine your expenses. Make a list of your living expenses and make cuts where you can – renting a cheaper apartment or canceling the cable can free up extra cash quickly.
Create an emergency fund. It's smart to save enough to cover at least three months' worth of expenses – but that can seem daunting. Start by saving up at least a nominal amount (say, $1,000) before moving on to your next financial goal, and gradually build the rest over time.
Pay off student loans and other debt (excluding mortgage). Focus on paying off one debt at a time while making minimum payments on the others. Repaying the highest-interest debt first is often recommended – but paying off a small debt completely might give you a boost of motivation.
Save for retirement. While you work on paying your non-mortgage debts, start planning for the future. Contribute whatever you can afford at first, and gradually add 1% to 2% more until you are contributing 15% of your household income.
Work on that mortgage. Once your other debts are repaid and your savings are rolling in the right direction, pay extra on your mortgage if you own a home – or consider home ownership by saving toward a down payment.
Work with Us
Ready to take steps toward your financial goals? A professional at Rockland Trust could help you consolidate debts from the past or focus on saving for the future.