But beware: Compound interest can work against you. Some college graduates opt for extra-low monthly student loan payments, which means unpaid interest is added to principal, says Deanne Loonin, staff attorney for the National Consumer Law Center. Over years, loan balances balloon and overwhelmed borrowers end up defaulting, she says.
Inflation is a threat Rising prices for goods and services aren't a serious problem today, but historically, inflation has averaged about 3 percent annually, says Jerry Miccolis, chief investment officer at investment firm Brinton Eaton. "Over the long term, even if you're already retired, it's the biggest threat to your future," he says.
That's why people need to take some risk and invest in stocks, commodities and real estate that can outpace inflation over time, he says.
Diversification Once you do invest, spread your money over different types of securities so your plans won't be derailed if a single stock or sector gets hammered. "Doesn't mean you won't lose money over the short term, but it does mean you won't lose significantly more than average," says Stuart Ritter, a financial planner with T. Rowe Price Associates.
You can do it Personal finance is not as tough as some may think, says J.D. Roth, editor of GetRichSlowly.org. "Not only can people learn this, they can do a better job with their money than anyone else can," he says. "Nobody cares more about your money than you do."
Several years ago, Roth was $35,000 in debt and started a blog about his efforts to dig out. He eliminated his bills faster than he expected and now makes a living helping others navigate finances.
Start your education by reading personal finance books at the library, he advises. And if you make a financial mistake, don't be hard on yourself. Learn from it.
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