6 Tips to Build Your Savings with Student Loans
Are you one of the many people who make financial resolutions every New Year? If so, congratulations! Whether your goal is to pay off debt, increase your savings or start investing for the future, there’s no time like the present to get started.
6 Tips to Build Your Savings—Even with Student Loans
While everyone’s situation is different, there are a few rules of thumb that can be useful when you’re trying to build a solid financial foundation, no matter how much student loan debt you have.
1. Starting Small If you’re like many people with student loans, you might not have a lot of extra money to invest or save at the end of each month. But that doesn’t have to stop you from trying. Putting away a small but consistent amount every paycheck, or once a month, can make a big difference over time. (Even a little something is better than nothing at all).
2. Reducing High Interest Rate Debt If you have multiple sources of debt, it may make sense to focus your efforts on those with the highest interest rates first. Of course, you should always pay at least the minimum on every debt you have each month. But if you have credit card debt as well as student loan debt, you might benefit from using a debt reduction strategy to pay off your bills.
3. Giving Yourself a Cushion A general rule of thumb is to have three to six months’ worth of living expenses saved in an emergency fund in case you’re faced with an unexpected expense or if your source of income should suddenly disappear.
4. Considering Investing as Soon as Possible When it comes to retirement investing, waiting can cost you money. When it comes to retirement investing, waiting can cost you money. The sooner you start investing, the more time your portfolio has the potential to grow through compound interest.
5. Take the (Free) Money and Run If you’re ready to start investing even though you still have student loans, there are a lot of account options out there. You could start by checking with your employer to see if the company offers a defined contribution plan, such as a 401(k), and if there is some type of matching contribution.
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