Q. I am just out of school, now I have three financial goals: pay back my student loan, buy a house, and save for my retirement. Which one should be my priority?
A. Of the three goals, retirement saving should be the top priority, unless your student loan's interest rate is very high.
Here are some steps you can follow:
a. Save at least 10% of your income in your 401(k) account, or at least get your employer's match. Invest fully in Roth IRA account ($5500 in 2013).
b. Develop a plan to repay student loan. Average Stafford loan's interest rate is about 6.8%, far less than credit card's interest rate of average 13%, so make sure pay off your other higher rate loan before start paying off student loan.
c. Instead of saving to buy a house, save for 3 months emergency fund first.
d. When the above is done, save for the down payment of your first house!
A. Of the three goals, retirement saving should be the top priority, unless your student loan's interest rate is very high.
Here are some steps you can follow:
a. Save at least 10% of your income in your 401(k) account, or at least get your employer's match. Invest fully in Roth IRA account ($5500 in 2013).
b. Develop a plan to repay student loan. Average Stafford loan's interest rate is about 6.8%, far less than credit card's interest rate of average 13%, so make sure pay off your other higher rate loan before start paying off student loan.
c. Instead of saving to buy a house, save for 3 months emergency fund first.
d. When the above is done, save for the down payment of your first house!
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