Nowadays everyone wants endless amounts of money but don’t know how to manage or work for it to feel secure. Or you can win the mega millions and become a millionaire in a day but that a slim chance. As a kid growing up my parents always said money doesn’t grow on trees it’s a life lesson of clarifying our wants and needs. Yes we enjoy the materialistic objects, which help amplify our lives; but some of us need to take a step back and question ourselves, does our life really depend on that designer purse or thirty dollar lipstick? As young adults we are considered infants to the real world where our parents are the seasoned vets. In the next five years of young adulthood handling money in the right way is key to setting up your success with money in the future. To live a comfortable life with a cushion of extra money for security every young adult should invest his or her efforts into a reasonable job, opening a checking account will help contribute to the success of retirement.
We wish money would fall right into our lap with a snap of a finger but in reality the best way to earn it is a job. I know the competition for jobs has become more and more competitive throughout the years but that’s why getting a college education is stressed so much nowadays. Once outta college graduating with a bachelor’s degree that’s the time to start buckling down to get money for living and maybe even more college to receive a masters which will make you stand out even more for job opportunities. When working for an income it’s best to acquire a job that has benefits attached with the company. With these benefits it makes life that much easier and one less thing to worry about; a benefit can be health care insurance, or a company car. You want a job that wants you just as much as you want to work for them, accommodating you to choose their company.
As paychecks come rolling in from your job you have to store the money somewhere and that place is the bank. The bank is basically a babysitter for your hard owned money but increasing throughout years. Opening a checking account, the transactional deposit accounts are held at a financial institution that allows for with drawls and deposits. Money held in a checking account is very liquid, being available in checks, atms, and credit cards. The most common checking account is a savings account. Savings accounts allow you to keep your money in a safe place while it earns a small amount of interest each month. These accounts usually require either a low minimum balance, like $25, or may require no minimum balance at all. An important interest would be compound interest, which is when you take out a loan interest is calculated for the first period (be it a month or a year). This interest is then added to the original total. Following on, the interest for the next period is calculated but is based on the gross figure from the first period.
When the time comes to retire you need money to rely on and that’s why they have created 401K and IRA A 401k is a company/employer sponsored retirement plan that allows workers to take out a portion of money from their daily paychecks, store it on a retirement plan account and earn interest tax-deferred. Tax-deferred means this saved income is not taxable until you withdraw it at the age of 65 or more. An IRA is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis. The three main types of IRAs each have different advantages a Traditional IRA is contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement. Many retirees also find themselves in a lower tax bracket than they were in pre-retirement, so the tax deferral means the money may be taxed at a lower rate. Secondly the Roth IRA is contributions with money you’ve already paid taxes on (after-tax), and your money may potentially grow tax-free, with tax-free withdrawals in retirement, provided that certain conditions are met. Lastly a Rollover IRA is a traditional IRA intended for money “rolled over” from a qualified retirement plan. Rollovers involve moving eligible assets from an employer-sponsored plan, such as a 401k, into an IRA.
With these easy tools necessary to live a comfortable and stable life economically retirement will be a breeze. If you start young and get on track with checking accounts, a 401k and saving you will be successful. The question you have to ask yourself is, “Do I really need that?” and once you’ve come to terms of differentiating the two, that’s when you know you’re on the right track. Saving is always the answer, that is how you’ll be able to own a house and a car one day is simply by saving up and placing the money into useful accounts.