Financial Tips Through the Decades: Money Moves Worth Making in Your 20s (Even If You Don’t Feel “Fi

Financial Tips Through the Decades: Money Moves Worth Making in Your 20s

(Even If You Don’t Feel “Financial” Yet)

Every season brings change to nature. Your 20s bring a unique kind of financial weather: new income, new freedom, and plenty of firsts. It is a great time to work on a few smart habits that can quietly compound into flexibility later. Here are my top tips for anyone in this exciting stage of life.

Start saving for retirement

I know, you are thinking, wait, I’m in the beginning of my career—retirement is ages away! You are right, but the earlier you start adding money to a retirement account, the more options you will have later in life around what your retirement looks like.

-         Remember, you don’t have to add the maximum yet, but work towards adding 10% of your income into a retirement plan.

-         If your company offers a retirement plan, sign up as soon as possible, especially if a match is offered.

-         If you don’t have access to an employer retirement plan, open a Roth IRA and start to automatically add money each month.

Drastically live below your means

Your twenties is the time in your life to learn to cook at home, have roommates, find inexpensive entertainment, be very selective with monthly subscriptions, maybe even have a second part-time job for extra income—be creative with ways to save money and get your friends involved! It’s incredibly important to have extra money each month to save and pay off debts—this won’t happen if you are spending more than your take-home pay. Being clear on what is most important to you helps direct where to splurge and when to be frugal.

Avoid credit card debt

It’s tempting to say yes to trips and fancy restaurants, etc., and pay it off later—don’t do it!  High interest rates and small payments can lead to years of debt.  It’s OK to say no to something you can’t afford yet.

Get your basics in writing: beneficiaries and simple insurance needs

Always add a beneficiary to your retirement account.  Also, if someone depends on your income (or would be financially strained without it), look for a term life insurance policy.

Build a financial cushion to protect against the unexpected

Life rarely goes just as we planned. Open a savings account and start to automatically save a little from each paycheck. This will be a lifelong practice.

You will use these funds for any type of unexpected expense, like a car repair, and more fun expenses like attending your friend’s wedding.

If you’re guiding a son, daughter, or grandchild through this season of life, the best gift is perspective: small steps taken consistently tend to beat grand plans that never start. If you’d like, we can help you (or them) turn these priorities into a personalized checklist.

Reach out at www.gillenwm.com