Investing is something many young people have a tendency to overlook. Years ago, few young women gave much thought to how to invest their earnings, as many planned to stop working upon having children. But many young women now continue to work even after they start families, and that has led many to take more active roles in managing their money. Investing can be hard for anyone to grasp, whether they're male, female, young, or old. The following are a few tips young women looking to grow their finances should consider as they begin their careers and start building their financial futures.
• Start saving for retirement. Young women working their first jobs may not be thinking about retirement, but it's still beneficial to take advantage of employer-sponsored retirement programs as soon as they are eligible. If no such program exists, start contributing to a retirement account you set up on your own. If you start saving for retirement right away, you won't miss the money you are depositing into your retirement accounts. But delaying retirement savings can cost you hundreds of thousands of dollars depending on how long you wait to open an account. When investing for retirement, take an active role, monitoring how certain investments are performing and making changes when necessary. Many people, especially young people, choose 401(k) investments and then stop monitoring them. The more attention you pay to your retirement investments, the more control you can take over your financial future.
• Look into local real estate. Real estate is often a wise investment, and successful young women need not wait until they walk down the aisle to get their feet wet in the real estate market. Research home costs in your area, including single-family homes and condominiums. If you can afford to do so, consider purchasing a home rather than renting an apartment. If you have enough money saved up for a down payment, your monthly mortgage payment may not be much different than your monthly rent, especially if you are willing to take in a roommate to cover your costs.
• Use credit wisely. Many young people, regardless of gender, find themselves facing large amounts of consumer credit debt. Young women can avoid such a fate by only using their credit cards when they know they can afford to pay off the balance immediately. It's important that young women start building their credit histories, but building a bad credit history is more detrimental than having a limited credit history. Resist the urge to engage in retail therapy unless you can pay for items in cash. Using credit wisely now will make you more attractive to lenders down the road, and that can save you thousands of dollars in interest on substantial purchases like homes and automobiles.
• Pay down debts. One of the best ways to achieve financial freedom is to pay down existing debts. Focus first on eliminating high-interest debt, such as credit card balances, and then move on to fixed-rate or low-interest debt, such as student loans. The sooner you eliminate debt, the more financial flexibility you will have.