7 Steps to Saving Money in your 20's and 30's

7 Steps to Saving Money in your 20's and 30's
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    So, you've started to make some income and now you want to know what to do with
    it 40% of Americans have less than $10,000 in savings. How can one of the
    richest countries in the world have this problem? Even people with very high
    incomes tend to say very little money because they can spend it all easily. here are
    seven steps on how to manage your savings. Step 1: Pay off credit card debt
    with Interest up to 25 percent, credit card debt is your number one priority
    although we all know we shouldn't get into credit card debt it can happen to
    the best of us. There are different methods you can use to pay off credit
    card debt. First, there's the snowball method where you take the smallest loan
    and pay that off first and progress to bigger loans over time. Even though this
    isn't the most financially sound it can psychologically help you pay off your
    loans and I get make you feel a sense of accomplishment. The second method is the
    Avalanche method in which you prioritize the highest interest loans to save the
    most money over time. Something you can also do is make automatic payments the
    day after your paycheck comes in so you don't have to use any willpower to make
    your payments. Step 2: Start an emergency fund. I recommend at least two months of
    your rent plus food costs. This gives you time to get back on your feet if you
    lose your job or get sick. If you have unexpected health care expenses or a
    car breaks down this should also give you a safety net to get yourself back on
    your feet. put this emergency fund in a Marcus account so you can get at least
    2% interest and the money is liquid when you need it. Some financial experts
    recommend 3 to 6 months of savings for the emergency fund but if you're saving
    money you likely want to get a higher return on your investment than 2% so you
    can invest in some of the following options. Step 3:
    Take advantage of any 401k price-matching from your employer. This
    is literally free money. If your employer gives you a one-to-one match or even a
    50% match then you're getting 50 to 100 percent return on investment. 401k
    savings come out of your paycheck pre-tax which is nice because you will pay taxes
    when you're older and likely in a lower income bracket. additionally for
    401k contributions are tax deductible so you pay less taxes in the end of the
    year and may receive a bigger tax refund. For example, if you make fifty thousand
    dollars pre-tax in Florida you would normally have a take home pay of forty one thousand
    eight-hundred dollars. Paying eighty-two hundred (8200) dollars in
    taxes. If you put $10,000 into your 401 K with fifty percent matching you will pay
    seven thousand dollars in taxes and have a take-home pay of thirty three thousand
    with fifteen thousand dollars in savings that is sixty two hundred more from your
    employer matching plus the benefits of tax deferral. step four: Pay of any
    student loans car loans or personal loans loans with higher interest rates.
    Interest rates above five percent are your first priority. Mortgage loans with low interest
    rates are not a high priority because you could do better off by investing
    them in the market. Having financial freedom and not being in debt is highly
    valuable as you can take time off working to travel or even start your own
    business. Step 5: Roth IRA or traditional IRA if
    you do not have an employer that offers them matching 401k the Roth IRA and
    traditional IRA are the next options. The current limit per person is six thousand
    dollars in 2019 if you think you'll be in a lower tax bracket at retirement than
    you are now, then go for the traditional IRA. If you think it will be in a higher
    tax bracket go for the Roth. There are a few advantages with Roth IRAs that are
    not available to traditional IRAs. You can withdraw our contributions penalty
    free at any time though earnings may be penalized or tax based on some
    conditions. Roth IRAs can be easily used in conjunction with a 401k at retirement
    since they have different tax treatment, thus allowing you to withdraw more
    strategically and stay in lower tax brackets. Ifyou expect to save more than
    six thousand dollars per year I recommend the Roth. Traditional IRAs
    are tax deductible like 401 K so if you'd like to receive the tax benefits
    this year go with the traditional IRA. Step 6:
    401k. If you do not have a matching 401k but your employer still offers a 401k
    plan you can contribute to this plan to take advantage of the tax benefits after
    you max out your Roth IRA. This is the next thing you should do if you make it
    to this step.Make sure you use the 401k to max out your tax benefits. Step 7 Max out your health
    savings account if you have a high deductible health insurance you may be
    eligible for a health savings account. Similar to 401k contributions your
    contributions to your health savings account are tax deductible. the money in
    your health savings account can help you to pay the deductible when necessary. it
    will earn interest when you do not use it. This has two benefits: tax-free growth and
    tax-free health insurance. after these steps you can decide to invest your
    money in it to a diversified portfolio or create a liquid savings account for
    six months of cost rather than just two months. I hope these saving steps helped
    you. If you have any questions about the order please leave a comment below so I
    can explain
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