Tech, Money, Career Advice, Now + Beyond

5 things I’m doing at 21 to make sure I secure my financial future

The future becomes the present pretty damn quickly, so the time to prepare for it is now.

When my fiance told me that I should invest in a Roth IRA, I was hesitant. It seemed silly to me to begin investing money towards my retirement when I wasn’t even making a salary yet. However, I listened to his advice, and am very glad I did.

Though I still don’t fully understand how a Roth IRA works (money and numbers have never been my thing) I learned from my own experience that it’s worth investing in.

1. Your money grows, completely tax-free.

The money you invest will grow each year, and you won’t have to pay any extra for it. As long as you don’t open the fund until after you retire, the money remains tax-free. This thus allows you to save more while investing less. This is beneficial for people just starting out in the realm of investing too, for you won’t have to worry about losing any of the money that you put away.

2. Investing early means you have a long time for the money to grow.

You may not have a full salary job yet, but investing even part of your part-time paycheck is better than waiting till you’re making bank to invest in a Roth IRA. If you’re in your 20’s like myself, you have at least 30 years, maybe, even more, to build on the money that you invest each year. This will lead to you having way more money than you would have if you chose to wait and invest in your retirement later in life.

Having more money for retirement is a great thing, so might as well do all you can to allow for that.

3. You have a limit to the amount you can invest, but that’s a good thing

You can’t invest more than what you made, which makes sense. You also cannot invest more than $5500 at a time in your Roth IRA. Though some may be deterred by the cap, if you’re in your early 20’s and are either still working part-time through college, or are dealing with a starting salary at your first job, it’s nice to know that you can’t invest more than you can handle.

The limit allows you to put some money away without feeling like you need to put in more than you did, because though retirement is important, so is having the money you need right now.

4. You can invest small amounts.

Much like my last point, being able to invest small amounts, for most institutions, even just $100 at a time is great for someone young who wants to start their retirement fund early. I personally couldn’t invest much more than that when I created my Roth IRA, and that was perfectly okay.

This plan allows you to invest what you can when you can, thus allowing the fund to grow with your bank account as you continue to get older and get closer and closer to retirement.

5. If you need to withdraw your money, you can.

After five years, you are allowed to take out your earnings in your Roth IRA for little to no penalty as long as you use the money for something necessary and are not just taking it out to spend on something unimportant. So if you ever get into a tight spot and need some extra money for a house or something important like that (provided that it’s been five years since you started your account) you can do so. Considering how uncertain your future is at a young age, this is a great feature that most retirement plans don’t have.

Though your retirement may be long ways away, investing in a Roth IRA is a great idea for anyone who is looking towards their financial future. Though I just opened mine, and have a while until I begin building upon it and ultimately get to use it, I am already looking forward to the benefits of having an account like this.