Millennials, Have Presidents Day Off? Get Your Investing Game Started

If you’ve got Monday off for Presidents Day, you may choose to spend it binge-watching “The OA” or brunching with your crew. But it would be smart to set aside a little time to give your finances the presidential treatment.

Not sure how to invest in your 20s or finally get that budget started? Here are some steps to take.

Bring spending under control

Overspending is one of the most common complaints about government; the powers that be are in a constant battle over how to keep the nation’s budget in check. Overspending plagues average Americans, too, especially with credit cards and the all-too-simple ways to use them (ahem, Amazon Prime). But if you are regularly living beyond your means, it’s a recipe for debt and disaster.

To start getting on track, write down all of your monthly income, including your day job and side hustles. Then write down all of your required monthly obligations: debt payments, groceries, bills, transportation costs and so on. If your expenses add up to more than your income, you’ve got to find ways to cut costs so you don’t accrue debt.

If you’re lucky, you’ll have a monthly surplus. Aim to designate a percentage of that extra cash for saving or investing, and consider setting up automatic transfers to savings or brokerage accounts each month. The remainder can be discretionary income for things like Netflix, nights out and Uber rides.

Get serious about retirement

Even presidents have to retire someday. Starting to save for retirement now can be challenging if you have huge student loans or rent payments. But the sooner you start, the more you’ll benefit later, thanks to compounding returns.

If you already have a retirement account, see whether you can afford to increase your contribution. Not there yet? If your employer has a 401(k), sign up to automatically contribute a percentage of your paycheck each month — especially if there’s an employer match, which gives you free money. Contributions are also pretax, which gives you the benefit of lowering your amount of taxable income.

If a 401(k) isn’t an option, consider opening a Roth IRA. In this retirement account, you contribute money after it’s been taxed. The money then grows, and you can withdraw it tax-free once you reach 59½.

Invest in your future

Presidents must make tough decisions, balancing what might be popular now and what might be best long term. You can look at your own investing the same way. Taking money that could be used on fun or immediate needs and putting it in the market may feel boring and unsatisfying. But investing even small amounts in nonretirement accounts can generate more returns than a savings account and help you buy a house or send your kids to college years from now.

Index funds and exchange-traded funds are excellent choices for new investors. They’re essentially a basket of various stocks and other investments that will diversify your portfolio and provide less risk than individual stocks. They also usually have relatively low fees. If you’re a newbie, learn more about how to invest in stocks before you get started.

Enjoy your day off, but don’t miss out on the chance to evaluate your finances and set yourself up for a more stable future.

Emily Starbuck Crone is a staff writer at NerdWallet, a personal finance website. Email: emily.crone@nerdwallet.com.

The article Millennials, Have Presidents Day Off? Get Your Investing Game Started originally appeared on NerdWallet.