3 Medium-Term Savings Goals for College Graduates
For college graduates, walking the stage is a celebration into a fresh chapter in life, including a very important step—“saving”. Savings goals can be short, medium, or long-term, yet creating medium-term savings goals builds financial security for young adults. Check out 3-medium-term savings goals for college-grads:
You’ve just graduated—start saving! Perhaps, choosing a retirement plan is the least of your worries, but starting early increases the savings balance overtime. Waiting to begin saving once pay increases or at an older age is a common mistake.
If you’re asking, what’s the benefit for saving early? ---maximizing compound interest is key! For decades, original contributions will flourish from the result of “reinvesting interest”.
The compound interest formula and an example:
For practice, imagine if I’m investing $20,000 at 7% interest, for 20 years, compounded quarterly. Now, plug these numbers into the formula below:
80,127.83 = 20,000 (1+ .07/4) ^ (4) (20)
A= final amount
r= interest rate
n= # of compounding periods per year
t= # of years (time-period)
That’s right, the final investment amount after 20 years is $80,127.23!
BUILD OR ADJUST BUDGET
Post-grad life is bittersweet with no 8 a.m. alarms or mid-term meltdowns, but remembering to build a budget or make adjustments, determines financial success. For beginners, build your budget using the “50/30/20” guideline for a simple method to split expenses into three main categories:
Essential Costs 50% = rent/mortgage, car payments, insurance, utilities, transportation, groceries
Financial Costs 30% = emergency savings, retirement, student-loan or credit card payments
Lifestyle Costs 20% = entertainment, eating out, shopping, etc.
Keep in mind, the “50/30/20” guideline is a starting point for budgeting, so don’t feel bad about making any tweaks!
START TO INVEST EARLY
Whether you’re determined to invest in the stock market, a home for renting to tenants, or simply yourself, starting early ensures financial stability. In fact, it’s cheaper and convenient to invest in the 20’s rather than 30’s, allowing college-grads to earn thousands of dollars.
How much to invest overtime? What rate will earn money on savings? What will be the investment in 2-5 years? Luckily, using credit unions’ online financial calculators does the hard work to answer these questions and more.
I See Me…Do You C.U.?
Eager for college-grad savings-tips? Want to discuss your mid-term savings goals? Ask us or share your story below!