Should I save for retirement while I’m in college?

Invest in Your Profit Potential

It’s important to recognize that your education is one of the biggest investments you make in your future. It will increase your earning power and allow you to save more for retirement after graduation.

While you’re in college, your top priority should be your studies and experiences that will help you become competitive in the job market. This may mean taking a low-paying or unpaid internship instead of putting money towards retirement. It may mean focusing on your relationships and networking rather than concentrating on retirement. If you plan to attend graduate school, getting good grades will benefit you more in the long run.

Focus on Staying Debt-Free

While you’re in college, the long-term goal is to secure a good job so you can put away extra money each month. You should also make the main focus on staying away from debt. The less debt you have when you graduate, the sooner you can pay it off and start focusing on retirement.

Note: Some college students may take out loans or grants and invest them in mutual funds because the rate of return is usually higher. However, it is never advisable to use borrowed money to play the stock market – you may find yourself in a financial bind later on.

Learn More About Finances

If you’re still in college, you might want to take a course in investing or money management while you’re there. This is a great time to learn how the market works and how to select good investments. It will also give you the opportunity to watch stocks and mutual funds without risking your own money right away. When the time comes to invest, you’ll be comfortable and confident in the decisions you make.

You won’t need to catch up on your retirement savings as long as you start investing as soon as you get your first job after graduation. This is a great time to start investing – when you suddenly begin to earn more money than you were. If you have to wait to contribute to your 401(k) plan, you can open a Roth IRA and start from there.

Extra Money? Consider Retirement Funding

If you’re working while studying and can pay for tuition in cash and still have some money left over, you might consider setting aside some cash for retirement. Before you do so, make sure you have an emergency fund sufficient to cover your expenses for three to six months and that you don’t have credit card debt. Once you’ve done that, you can begin investing in a Roth IRA or your 401(k). Ensure you have enough money set aside to cover unexpected school expenses or that you’re saving to cover the time when you’ll be in an internship, when you might not earn much.

Look at the Big Picture

While you’re in college, focus on getting good grades and building relationships so you can secure a good job once you graduate. Then you can start planning for the future with things like owning a home and retirement, along with other priorities such as starting a family.

Remember that things will work out fine. School first, then your job, and the rest of your life. While you should focus on saving while studying, it’s acceptable to postpone saving for retirement until after you graduate. After all, the best retirement plan is to get a good degree that will earn you a high-paying job.

Source: https://www.thebalancemoney.com/should-i-save-for-retirement-while-i-m-in-college-2386368