Q. I have a student loan needs to pay back, want to buy a house as soon as possible, and also want to save for retirement as early as possible. How should I prioritize them?
A. Of the three, saving for retirement should be your number 1 goal, unless you have a student loan with a very high interest rate.
The right way to prioritize these three saving goals is:
a. Retirement saving first
Save a minimum amount of 401K to at least get your employer's match. If you can set aside 10%, that will be better.
b. Budget for student loan payment
Estimate how much student loan you need to pay back each month. While you want to pay back all of the student loans asap, but it's more important to develop a pay back plan that factors in your other saving goals.
c. Prepare a rainy day fund
Save a few months' emergency fund that can last at least 3 months.
d. Save for down payment
Start saving for your down payment, aim for 20% down payment saving, plus closing costs.
A. Of the three, saving for retirement should be your number 1 goal, unless you have a student loan with a very high interest rate.
The right way to prioritize these three saving goals is:
a. Retirement saving first
Save a minimum amount of 401K to at least get your employer's match. If you can set aside 10%, that will be better.
b. Budget for student loan payment
Estimate how much student loan you need to pay back each month. While you want to pay back all of the student loans asap, but it's more important to develop a pay back plan that factors in your other saving goals.
c. Prepare a rainy day fund
Save a few months' emergency fund that can last at least 3 months.
d. Save for down payment
Start saving for your down payment, aim for 20% down payment saving, plus closing costs.
RSS Feed
