Being in your 20’s is an exciting time. It’s when you get your first job, your first apartment, and gain actual independence. It can be very tempting to invest in a shiny new car, or purchase that condo in the middle of the city – but have you ever thought of how that will impact your finances in the future?
In this day and age when the 20-something population needs to grow up ahead of their time, your financial knowledge could mean the difference between early retirement, OR bankruptcy. Don’t fret though. Remember: you’re young, you have a career, and it’s never too early to get a head start on saving for your dreams. Here’s few tips from Montgomery bankruptcy lawyer :
Tip #1: Prioritize Paying Off Debts
It’s all too easy to spoil yourself; especially when you have a high-paying job. But buying that car, or taking a loan for that high-end apartment may add up on your existing debts. If you have student loans, make sure to make steady payments. A common mistake for people in their 20’s is upgrading their lifestyles BEFORE they have cleared their debts. Live within your means or better yet, live like a broke college student while you’re settling payments.
Tip #2: Get the Right Insurance
Life has many surprises. But you don’t want those surprises to land you on a financial crisis. Be prepared by getting the right insurance such as health, life, and disability insurance. This is particularly important if you have dependents (like children or elder family members). Accidents happen and if you’re not ready, those medical and hospital bills may put a huge hole in your savings account.
Tip #3: Begin Saving for Retirement
It’s NEVER too early to start. We all dream of relaxing on a tropical island, with all our cares and worries being carried away by the sea breeze. If other people can retire in their 40’s, so can you! Don’t think that retirement is too far off. If you begin saving for it now, not only are the chances high that you can retire early; but you can rest easy knowing you can afford life’s pleasures when you want it.
Tip #4: Minimize Use of Your Credit Cards
It’s understandable that you may have extra expenses after college. There’s a new wardrobe for your new job, you may need to move to a new city, or buy furniture for your apartment. Still, whenever you can (and unless it’s a REAL emergency), limit usage of your plastic. Credit card debts can easily go haywire and you may find yourself unable to keep up with payments. Not to mention that most cards carry high interest rates and other fees when not paid on time.
Tip #5: Create a Separate Emergency Fund
When you’re in your 20’s, it’s so easy to spend your entire paycheck and then save what’s left of it. However, financial experts suggest setting aside a small portion of your salary and putting it into a separate savings account. This will act as a cushion for those unexpected circumstances (like health issues, repairs, job loss, etc.). What’s great about being 20 is that you decide how much to put in it each month. In fact, it doesn’t need to be big. $500 or so is enough so you can slowly build your emergency fund.
Your 20’s will be an exciting time for you – but don’t ignore your finances. By looking into a great future and planning for it, you will enjoy the fruits of your labor sooner than you think. Don’t forget to consult your financial advisers for expert money advice.