Five Financial Moves to Make in Your 20’s
Author: Sound Choices
September 1, 2017
THE CONTENT IN THE BELOW ARTICLE IS MEANT FOR CANADIAN INVESTORS ONLY
As you begin investing, it’s important to create a solid foundation.
If you’re in your 20’s, there’s a good chance you’ve got a job that pays enough to let you cover your regular expenses while having some money left over. So, what are you going to do with it? While financing your dream car may seem like a good idea, it may not be the most prudent financial decision.
You’re at a great stage in your life, especially when it comes to saving and investing. One of the greatest assets you have in terms of building wealth is time. With a few smart decisions you can make sure that you start off your financial journey on the right foot. Here are a few tips to make that happen:
- Pay down student debt. Canadian household debt is at record levels, it could put many people with high debt levels in financial trouble if interest rates go up again. Establish a reasonable payment plan and make sure you direct enough of your income towards debt so it doesn’t overwhelm you.
- Open a Registered Retirement Savings Plan (RRSP). in your 20s many think they can put off retirement planning, but, dollar for dollar, the money you invest in your 20’s and early-30’s can have a dramatic impact on your retirement savings, more than the money you save in your 40’s and 50’s. That’s the power of compounding! Check if your company has a Group RRSP matching program or arrange to contribute a small amount every payday.
- Open a Tax-Free Savings Account (TFSA). It may also make sense to consider contributing to a TFSA before your RRSP based on your income and tax deferral strategies, or you can consider opening both – a financial advisor can help you decide. Either way, a TFSA is a great way to start building your savings, whether for a short-term goal like a vacation or a car, or to establish an emergency fund for unexpected expenses.
- Consider post-secondary education or continuing education. Exhibiting a commitment to lifelong education can be great for your career development. Post-graduate degrees and continuing education certificates can improve your earning potential.
- Work with an advisor. People in their 20’s often think they don’t have enough assets to warrant professional advice. On the contrary, now is a perfect time to seek advice. An advisor can help you create a financial plan and answer any questions you might have about reducing debt and saving for the future.
Checklist: Things to Do
- Build a debt reduction plan
- Open a TFSA
- Open an RRSP
- Check if your employer offers a Group RRSP plan
The contents of this Web site are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.