Financial Planning
Financial planning is an ongoing process that will reduce your stress about money, support your current needs and help you build a nest egg for your long-term goals, like retirement. Financial planning is important because it allows you to make the most of your assets, and helps ensure you meet your future goals.
- Saving and Investing
NerdWallet has a great article that discusses the differences between saving and investing. Read the article to gain a better understanding of the two so you can make better plans for your money.
- Compound Interest
Compound interest is calculated on the principal (initial investment) and then on accumulated interest, essentially interest on interest. The Compound Interest Calculator from NerdWallet is a useful tool to help you understand the value of compound interest.
You may also be concerned about how this works for your federal loans. Interest does not work the same for these loans. Read How Interest is Calculated from the Federal Student Aid website about how interest works for federal loans.
- Risk
Investing involves different levels of risk tolerance. There are different types of investments for varying levels of risk. For example, if people were very conservative and prefer as little risk as possible, they may save their money in a bank or credit union. If people were willing to be aggressive and tolerate risk, they may invest in individual stocks. The key to investing is knowing your risk tolerance, diversifying your investments (i.e., not having all your money in one specific investment), and allowing your money to collect compound interest over a long period of time.
Tips
- Get in the habit of saving
- Invest early
- Create an emergency fund
- Diversify your investments
- Take advantage of employer matching retirement plans