Starting your first job out of college is an exciting milestone, bringing with it newfound financial freedom. You might find yourself renting your first apartment, buying a new car, or planning a vacation. While it’s great to enjoy the rewards of your hard work, it’s crucial to establish investment habits that will set you up for future financial success. Your 20s are an ideal time to start investing, as the money you invest now will compound and grow over time, allowing you to reap the benefits later in life.

In this guide, we will discuss four strategies that young adults can use to prepare for investing.

1. Create A Budget

It’s easy to underestimate your monthly spending and savings without a budget. Before you start investing, create a budget to visualize your expenses in categories like groceries, rent, utilities, and entertainment. Detail any debts such as credit cards, auto loans, or student loans, and plan how much of your income will go toward each balance, monthly. Additionally, set a monthly savings goal. Even contributing $50 per paycheck would add up to 1,200 a year if you are paid bi-weekly, and it would help build an emergency fund.

2. Write Down Goals

Before investing, consider your goals, separating them into short-term and long-term categories. Short-term goals might include saving for a vacation or making a down payment on a car, while long-term goals could be paying off student loans or buying an investment property.

In addition to thinking about goals, you should consider what your risk tolerance is. When you are young, you can have higher risk tolerance since you have a longer time to wait out the market fluctuations as opposed to someone closer to retirement. Nevertheless, you may decide to take a more conservative approach to investing if you need cash for another specific goal or if you get very anxious seeing accounts sometimes dip with market volatility.

3. Open A Retirement Account

Although retirement may seem distant, it’s wise to start contributing to your retirement plan as early as possible to benefit from compound interest. The easiest way to begin is by contributing to an employer-based retirement plan if your employer offers one. Many employers match contributions, accelerating your savings growth. These plans are tax-deferred, meaning you don’t pay taxes until you withdraw funds. Adjust your contributions as your income changes to help ensure you have enough for retirement.

If your employer doesn’t offer a retirement plan, consider opening an individual retirement account (IRA). Traditional IRAs are tax-deferred, while Roth IRAs require upfront tax payments but are beneficial if you expect to be in a higher tax bracket later. Consult with your advisor to determine if a Roth IRA is right for you.

4. Educate Yourself

Opinions on what constitutes a good or bad investment vary widely. Friends and family may have strong opinions, but it’s essential to consult a professional who understands the markets and has a fiduciary duty to provide investment advice in your best interest. A financial advisor can help build, monitor, and rebalance your portfolio to ensure you stay on track to meet your goals. Reach out to one of our advisors to see how we can assist you.

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Hightower is a group of investment professionals registered with Hightower Securities, LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities, LLC; advisory services are offered through Hightower Advisors, LLC. This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices or other information contained in this research is provided as general market commentary; it does not constitute investment, tax or legal advice. Please consult with your advisor, attorney and accountant, as appropriate, regarding specific advice. Hightower or any of its affiliates shall not in any way be liable for claims and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice. Forecasts represent median expectations and actual returns, volatilities and correlations will differ from forecasts. These materials were authored by Fiducient Advisors and are being used with their permission. This document was created for informational purposes only; the opinions expressed are solely those of the author and do not represent those of Hightower Advisors, LLC, or any of its affiliates.

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6 Meridian is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors. All data or other information referenced herein is from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other data or information contained in this presentation is provided as general market commentary and does not constitute investment advice. 6 Meridian and Hightower Advisors, LLC or any of its affiliates make no representations or warranties express or implied as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. 6 Meridian and Hightower Advisors, LLC assume no liability for any action made or taken in reliance on or relating in any way to this information. The information is provided as of the date referenced in the document. Such data and other information are subject to change without notice. This document was created for informational purposes only; the opinions expressed herein are solely those of the author(s) and do not represent those of Hightower Advisors, LLC, or any of its affiliates.

Hightower Advisors, LLC or any of its affiliates do not provide tax or legal advice. This material is not intended or written to provide and should not be relied upon or used as a substitute for tax or legal advice. Information contained herein does not consider an individual’s or entity’s specific circumstances or applicable governing law, which may vary from jurisdiction to jurisdiction and be subject to change. Clients are urged to consult their tax or legal advisor for related questions.