Carrie writes in:
I’m a 23 year old single woman with a solid government job that pays reasonably well. I have quite a bit of free time. What I’d like to do is somehow “bank” that free time so that I can have more free time later on when I (theoretically) have a child, as I’d like to be more flexible with my time then. What’s the most prudent way to go about this?
There are a few options here.
First, you want to make sure that your financial situation is as clean as possible. You’re going to want to strive for debt freedom above all else. That should be your first and biggest goal. You’re also going to want an emergency fund, probably equal to about a month’s worth of living expenses (an appropriate level for a young, healthy, single person).
Next, you’re going to want to save. The more money you have in the bank when you make the choice to have a child, the easier that process is going to be and the more flexibility you’re going to have.
Since your savings timeframe is somewhere around ten to fifeen years (this is an assumption based on your story), it’s more important to save more than to maximize your return on the savings, as there’s not really enough time for the power of compound interest to really work in your favor here.
How do you go about that? Naturally, you’re going to want to maximize the gap between your earnings and your spending (obviously, spending less than you earn).
You can maximize that gap in two directions: by spending less or by earning more.
Generally, the spending less aspect of this doesn’t require that much additional time. It mostly just requires you to pay close attention to all of the things you’re already doing.
Thus, your best bet to utilize the extra time you have right now is to earn more money.
Since I don’t know exactly what your background is or your training, it’s really hard to point you toward a specific path here in terms of earning more. However, I’d encourage you to seek out a part-time job at this juncture, ideally one that can use at least some of your skills.
Then, when you start earning that new paycheck, bank every single dime of it. First, use the whole check to make extra payments on your debts (keep making the biggest payments you can out of your regular check, too). When your debts are gone, bank the entire extra paycheck.
You may have a set of skills that would be put to better use in starting a side business of some kind. If that’s the case, devote that spare time to starting a side business that really utilizes your skills.
If your goal is to maximize your flexibility down the road, the best way to do that is to maximize the gap between your spending and your income and put that difference to good use – and raising your income is probably the best way for a single person to channel quite a few extra hours per week.