Personal finance in your 20’s

Individuals in their twenties will face many important decisions in their financial future. Some decide to enter the working world right after graduation while others decide to go back to school. In either case, major expenses such as apartments or student loans can get in the way. Although those in their 20’s are a long way from retirement, it is the perfect time to start planning for the future financially. Beginning to save in your 20’s allows for long term financial growth over several decades.

This blog is going to provide some direction in financing your 20’s. These tips are designed to help add some financial stability later on in life.

  1. Be Cautious – Many people leave their parent’s home and then decide it’s time to buy. Sometimes people go a little wild once in this phase and can go overboard. It is easy to do this, especially when they start getting approved for credit cards. Pay for important necessities like clothes and food, even feel free to travel but don’t live a lifestyle you can’t support. Just because you have money doesn’t mean you have to spend it.
  2. Establish Good Credit – This message has been a constant theme in this site’s blogs. Please feel free to read more about it here. Establishing good credit early on in life allows you to make important life purchases (such as a car) later on. It is important to use your credit card but even more important to pay it off at the end of every month to establish good credit. Also, becoming overly reliant on your credit card can lead you down a precarious path
  3. Be practical – When making decisions on big purchases, it is wiser to choose practicality over luxury or “flash”, this can come into play when making big purchases like a car or even deciding to rent an apartment. Upscale doesn’t necessarily mean better – comfortable should do
  4. Save, save, save! – This rule speaks for itself. When confronted with the decision to spend or save, the less obvious but far more valuable option is to save. This means undertaking things like taking advantage of your company’s 401K plan and making maximum contributions to it whenever possible for as long as possible. This type of saving becomes essential during retirement years.
  5. Take Responsibility – Be in control of your finances. Don’t make borrowing from relatives or parents a general habit. With a proper budget you can have both financial stability as well as independence