Your twenties are an exciting time in your life. You’re venturing into adulthood and making major life decisions. And your finances happen to be one of them.
Whether you’re starting your first job or still in college, it’s never too early to create a financial plan.
Here are 7 smart money moves to help you build a solid foundation for your future.
Start Saving Early
One of the best things you can do for your future is to start saving early. Even if you start small, the earlier you get going, the more time your money has to grow. You can start with a high-yield savings account and gradually move on to CDs or mutual funds. Stocks and other asset classes are also good options when you’re ready.
Create a Budget
Creating a budget is a great way to keep track of your spending. It’s crucial to figure out your expenses and prioritize them so you’re not overspending. By living within your means, you can make the most of your money and avoid unnecessary debt.
Pay Off Credit Card Debt
Credit card debt can quickly get out of hand if you don’t keep track of your spending or pay off balances regularly. The rule of thumb is you don’t spend what you can’t afford. High-interest rates can eat away at your finances, making it hard to save and invest. If you want a credit card, don’t use retail cards. Instead, apply for cards with perks like airline miles or cash rewards on purchases.
Start Investing In a Retirement Account
It’s never too early to save for retirement. You can start by researching your company’s 401(k) plan or open an individual retirement account (IRA). Look into Roth IRAs or a Traditional IRA to decide which is best for you. The earlier you invest, the more time your money has to compound so you can have a nice, cushy future.
Build an Emergency Fund
Unexpected expenses can happen to anyone at any time. That’s why it’s crucial to build an emergency fund. Aim to save at least three to six months of living expenses. The more you have, the better. You want to be ready for anything life throws at you.
Cut Back on Expenses
It’s tempting to overspend in your twenties. When you have tons of youthful energy, the world is your playground. But be mindful of expenses and find creative ways to live within your means. You can free up a lot of money (for saving and investing) by avoiding unnecessary expenses.
Increase Your Financial Literacy
One of the best things you can do for your financial well-being is to increase your financial literacy. Learning about personal finance, investing, and budgeting can help you make informed decisions about how to spend your money so you don’t make costly mistakes.
The best and worst part about being a twenty-something is that your decisions can change the rest of your life.
Money may not solve all your problems — but in most cases, it makes life easier. With careful planning, you can create a budget, save, invest, and build a financially secure future.
The earlier you start making moves, the better!
