College students should start thinking about their future, even about retirement, as early as possible. It's good to have a plan so that when you enter the workforce, it will be easier to set aside money since you have already picked up the habit of saving early.
It was previously reported that college students should stop focusing too much on the present (e.g. exams and partying). They should start thinking about their future, too.
Students should save for retirement as early as college since it would maximize compound interest. Just saving $25 each month to an account with 7 percent interest would earn one $59,890.53 after 40 years.
TIME shared four tips on how college students can start saving early. Check out these tips and how you can incorporate them in your daily life.
1. Look for robo advisors and lifecycle funds.
Robo advisors can help you in terms of where to place your investment. They just ask you some questions and find the best funds for you.
On the other hand, look for brokerages that offer low-cost lifecycle funds. These balance your investments based on your age.
2. Take advantage of your employer's sponsored plan.
Several employers offer 401(k)s as well as other retirement plans. Check with your boss or your Human Resources representative if you can apply for this type of plan. There are companies who also offer to match your contribution.
3. Use finance apps.
There are a lot of apps in App Store and Google Play that can help you manage your finances. There are apps that can help you fully understand the investing process. Check out these finance apps that every college student needs.
4. Create an IRA.
Have an Individual Retirement Account. You can apply for this even if you're not eligible for a 401(k) at your workplace.
With this, you can set aside money that you have earned through work. Ask for help from a financial advisor before you create this type of account to ensure that you are able to choose the right funds.
