There is never a time in life when there is not competing demands for your income. In college days, money can sometimes be tight, though student loans are designed to fund education. It is widely accepted that career prospects improve with graduation. Student loans need to be repaid and that commitment must be factored into a personal budget. In the early days of a working life there will be other bills to pay and while there are no convenient way of lending these days only without credit check lenders can bring some luck for you with slight high interest rates ; often monthly rent if the job has taken you away from home to a new city. However, after a decade of working, you should be in reasonable control of your finances and your monthly pay check much healthier than when you started out. It is the time to really plan for the future if you haven’t done already.
Your student debt should have gone down; ideally it is fully paid off, but at least it is not the most expensive debt in modern day life. If you got a credit card to help fund your education and you have built up a balance, merely paying off the minimum the card company requires at the end of each statement period, that is expensive debt. You might ask how can taking on more debt solve that problem? If you take out a cheaper personal loan repayable by installments you can pay off a credit card balance and save yourself money beyond the short term because you will be avoiding wasteful interest payments. By all means keep a credit card, but only use it for convenience and pay the full amount appearing on the monthly statement every time.
Ideally, you have reached your 30s then without too many financial problems because by then you really should be thinking well ahead.
The demands on your money by then may be a mortgage and a growing family but there is something else that you should be considering and that is retirement even though it seems a long way into the future. The sooner you are making regularly savings into a retirement account, the more chance it has to grow. Compound interest is a great ally for saving but it needs time to work.
Retirement is not going to be cheap. However, the difference between what you can save if you put a fixed sum away from the age of 35, and what you will have if you delay until 45 is extremely significant; your fund will be more than double. For example, if you put aside $250 every month for 30 years from the age of 35, your fund will be $280,000 with 7% average growth. If you delay for 10 years, it will be $123,000. If you don’t start until 55, it will be a mere $41,500! You would be putting away $30,000 extra by starting at 35 than at 45, but the difference in your fund would be $157,000!
The recession was effectively caused by the inflation in the real estate market and the toxic debt that financial institutions found themselves owning. That said, real estate has been seen as a good medium to long term investment and that remains the case. If you can build a deposit and negotiate a mortgage, then you can expect the value of your real estate to grow over your working life. You may want to sell and realize your asset on retirement, especially if you buy a family home and you no longer need something as large.
In any event, you should look at real estate as a good investment for you and your family. If you buy in your early 30s, you should be mortgage-free by the time you retire, so even if you don’t sell, your monthly expenses should fall.
After 10 years of working, hopefully, you will have decent credit history that you ensure your mortgage application succeeds. As mentioned earlier, if you get control of your finances and don’t carry expensive debt like credit card balances, your position should be fairly good.
A College Fund
When you have a small family you certainly have responsibilities. If you can just put a small sum aside every month, come the time when they are going to college, you may have a sizable fund. Remember the example of what compound interest can do, given time. The choice of how you invest this money is yours, and perhaps it is worth taking professional advice? There are tax advantages if you are saving for higher education so what do you think?
Financially your 30s are an extremely important time. Think about where you stand, where you would like to be, and also where you want to be when you retire. It may be time to act!