Money Matters For Generation X

Investing can be structured to suit any lifestyle and age. The key is making those first steps count.

cost more than cooking at home. Living expenses can be cut by moving back in with your parents a couple of years once you finish college. A simple $400 in rent a month adds up to $4,800 in the matter of just one year. Look twice before you lease that snazzy car; payments can sap your financial base.

We can’t stress too much the need to pay off credit cards. These days, a lot of students tap into special offers and credit lines only to run up balances in the hundreds, if not thousands, of dollars. Worse yet, they’re strapped with interest rates on the order of 16%-18%. Look at it as an investment: by whittling down your large credit balances, you’re automatically earning 18% a year on your money.

Get a second job if need be to invest $2,000 in an IRA every year. That’s around $167 a month or just about what you spend on lunches each month. An IRA is a critical part of your investment program because it reduces your taxable income by $2,000; and any interest or dividends that you may earn are not taxable until you retire or cash in. This is one of the few remaining tax freebies offered by the government, so take advantage of it.

If your company offers a 401 (k) plan, take advantage of it for the simple reason that your employer is agreeing to match your savings up to a specified amount each year. This means a free
boost to your salary, so don’t leave it on the table. In addition, any contribution you make is deductible from your taxable income.

Remember to pay yourself first: no matter how much you earn, we suggest that you save at least 10%. If you have not found your dream job and are still struggling to make ends meet, fear not. You don’t need to earn the big bucks to construct a solid financial base, provided that you spend your earnings wisely. Time is your best friend while you are young. Just $100 a month consistently invested will go a long way and place you firmly on the path to financial freedom. So press on.

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