Posted Aug 13, 2015
7 Financial Tips Every Twenty-Something Should Know
There’s never a bad time to start thinking about your financial future, even in your twenties. Good money-saving habits need to start early in your life, so if you recently graduated college and moved into your first apartment or are starting your first job, you’ll need to start working within a budget and investing in your future.
You don’t have to be a Wall Street whiz kid to do this, either. There are plenty of ways to handle economics, and understanding how to manage your money as a twenty-something will carry over to the rest of adulthood.
To get started, think about implementing some of these excellent financial tips for millennials:
1. Make a Budget
It’s probably not the most exciting thing you’ve ever done, but creating a budget is the blueprint for your future financial success.
Keeping track of items you know you are going to spend money on each month (rent, bills, student loans, groceries) will give you a clear visual of what you need to do to stay on the right financial path.
2. Consider Automated Bill Payments
If you already have a salary and pay days, you can take the stress out of tracking your expenses with automated bill payments.
3. Think About Your Company’s 401K and IRA Options
Even if it is just a small amount, think about putting in a fraction of your pay into your company’s 401K, and possibly a Roth IRA. These can both help you work toward a retirement fund.
Although your retirement plans might be a long way down the road, it is important for you to think about your financial plans once your professional career comes to an end.
Even putting away just 1% of your income every year can really add up several decades from now. According to Forbes, a Roth IRA in particular gives you a lot of flexibility and independence, because you can access your funds in the case of an emergency without paying penalties or taxes on your investment.
Not only does this help you plan for the future, but it is also wise to have a rainy-day fund like this in general.
4. Your Savings Account – Use It!
Seriously. It’s there for a reason. As much as we all would love to predict the future, we never know what is going to happen.
What if you have to take a leave of absence? Or maybe you would like to take a sabbatical in the future. Perhaps you want to go on a fabulous vacation, buy a house or consider having a child one day.
All of these events require you to have savings, so start contributing around 10% of your salary toward this every year.
5. Pay Down Those Student Loans
While student loans are “good debt” (after all, it was an investment that helped your career and earning potential), being saddled with student loan debt for the rest of your life is not ideal.
If you can afford to pay more than the minimum payment, consider doing so.
6. Be Careful with Credit Cards
Interest rates for these can soar– and send your credit score into a free fall. While one or two credit cards might be great for emergencies and help build up your credit, having more than that can really cause you to walk a fine line.
Keep your spending down to a minimum and only purchase things that you know you can pay back.
7. Take Advantage of Technology
Young people are excellent with technology, so use these skills to save your hard-earned cash. Apps like Groupon and LivingSocial offer excellent discounts for a large variety of goods and services. However, there are also apps like Mint that can help you manage your money a lot easier.
If your bank has an app (and most do), be sure to download and use it– having remote access to your accounts can keep everything on the same page.
You might be young right now, but developing good financial habits now will definitely help you feel more secure in the 30s, 40s and beyond.
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