If you’re a twenty-year-old, there are many things you’ll need to know and understand about money and finance. Budgeting, taxes, expenses, and so on. Avoid credit card debt. Establish good credit. Okay, so you don’t want credit card debt, but you do want to establish credit early, so you’ll be able to get good rates on mortgages, etc. Invest in index funds that have low fees (expense ratio). Index funds follow the market and are diversified. The Dow, the S&P 500, and the Nasdaq 100 – are all indexes. They are less risky, and you’ll have to manage them less. As you get more familiar with the market, you may want to start “picking stocks,” but it’s good to balance out your portfolio with index holdings.
Fixed Costs Low
Keep your fixed costs low. Establish a life you are comfortable with and live within your means. Don’t set yourself up with large fixed costs that are difficult to trim when you run into a financial bump. Understand taxes. Since you aren’t employed now, this may not be a big concern today. However, once you start working, you are going to want to know how much money you will be forking out to Uncle Sam. Speak to someone knowledgeable on the topic, like a tax and financial advisor and set things up when you are young. Talking to affordable tax consultants will make your life easier as the years and dollars pile up.
Splurge when you can. Don’t sweat small expenses all the time. Splurging is fun and part of enjoying life. Treat yourself when you can, but don’t make it a habit. If you do, you’ll need to up the ante, and it can get silly.
Veritax Advisors LLC is a specialized and dedicated tax firm serving the Certified Public Accountant community, helping clients get accurate reports when filing tax returns.
