In just a couple months I’ll no longer be able to say I’m in my mid-20s. I’ll officially be in my “late 20s,” and that’s a crazy thought! I know finance is something a lot of people struggle with, so I wanted to share some helpful financial tips I’ve learned through both experience and advice over the years.
Establish a Budget
The first step is understanding your financial habits and establishing a budget. How much do you make each month? What are your fixed expenses (i.e. bills)? Variable expenses? What are your goals for spending and saving? These are all important Qs to ask yourself when figuring out your budget. You can see my tips on how to establish an effective budget here.
Build Your Savings Account
Generally, you’re able to be a little more “free” with finances in your 20s compared to 30+ when your responsibilities increase (e.g. marriage, family, house), so now’s a good time to start saving for those big ticket life things like a wedding, house, vacation, and/or ultimately, retirement.
Pay Debt Off
Obviously the sooner you can get rid of any debt, the better. But especially by 30! Not only are you paying the principal amount (the base of the loan), but you’re also paying for interest, which is the real killer. If you have a few different loans and aren’t sure where to begin with your debt, start by paying off the loan with the highest interest rate.
Enroll in a 401k Plan
Another 40ish years to go until retirement, but who’s counting?! You know how we’re all in disbelief that it’s already almost mid-April? Well since high school (and then college) graduation, time is FLYING. And I don’t know about you, but when it’s time to retire, money is the last thing I want to worry about! By 30 you should be enrolled in a 401k plan to save for your retirement. Most companies even match up to a certain percentage, so if you put 3% in and your company does too, that’s 6% of your paycheck going toward your future!
Build an Emergency (“Rainy Day”) Fund
Separate from your savings and 401k, you should have an emergency fund for unexpected things. You never know when something will pop up like your roof caving in (ugh, worst nightmare as a new homeowner), losing your job, a last-minute surgery, etc. Be prepared! Ideally this fund will include 3 months of living expenses, which I realize is quite a bit. BUT if you start moving a little into that fund at a time (direct deposit is the best), you’ll get there faster than you’d think.
Since we’ve talked all about the serious stuff, I’ve saved the best for last. HAVE FUN! While it’s important to take all of the steps above to ensure your financial security, you still want to make sure you budget in there for fun. Because as I said earlier, your 20s are generally the years you have a little more freedom before “settling down.” So plan a trip, buy that handbag you’ve been eyeing! Don’t forget to factor in the fun!
Have you started on any of these? Any other tips you’d add?