{"id":1999,"date":"2021-03-24T20:46:48","date_gmt":"2021-03-24T20:46:48","guid":{"rendered":"http:\/\/ec2-3-209-223-66.compute-1.amazonaws.com\/?p=1999"},"modified":"2023-12-07T11:54:59","modified_gmt":"2023-12-07T17:54:59","slug":"money-advice-for-your-20s","status":"publish","type":"post","link":"https:\/\/www.accrediteddebtrelief.com\/blog\/money-advice-for-your-20s\/","title":{"rendered":"Money Advice for Your 20s"},"content":{"rendered":"\n

The first full decade of adulthood is an exciting time. With their teen years in the rearview mirror, 20-somethings get to experience a new sense of freedom and independence as they tackle the real world on their own. This time also comes with many overwhelming firsts, like entry-level jobs, big-ticket purchases, new living expenses, investments and debts. <\/p>\n\n\n\n\n\n\n\n

Looking to stay on top of your finances while still enjoying your twenties to the fullest? Here are 10 financial objectives to focus on between the ages of 20 and 29:<\/p>\n\n\n

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Gain Marketable Skills<\/h2>\n\n\n\n

As you transition out of your teens and into your twenties, you\u2019ll need to have the proper training and skills to excel in the workforce and start earning. While the default assumption is that you\u2019ll need a college education right after high school, you have options. You may choose to obtain a diploma or certificate at a trade school, take relevant courses through a Massive Open Online Courses (MOOC)<\/a> provider, receive specific training in the military or learn on-the-job through a work training program. You can also put college on pause and save up for classes in order to avoid hefty college loans later. <\/p>\n\n\n\n

Additional education and training opportunities can help increase your professional value and income potential \u2014 don\u2019t forget to list what you\u2019ve earned and completed on your resume!<\/p>\n\n\n\n

Work and Earn an Income<\/h2>\n\n\n\n

Once you\u2019ve gained the knowledge and skills needed for your trade, it\u2019s time to find a job and start making money. It\u2019s rare that a job will magically fall into your lap \u2014 you\u2019ll likely need to brush up your cover letter<\/a> and resume<\/a>, apply for jobs and prepare for interviews<\/a>. <\/p>\n\n\n\n

Be open to the work opportunities that come your way, even if they seem \u201cbeneath\u201d you. Entry-level jobs often come with menial tasks and low pay, but they can provide you with the \u201cfoot in the door\u201d that you need to gain experience and work your way up in your industry. Hard work and a can-do attitude during your first working years can go a long way in helping you earn raises, get promotions or qualify for more senior-level positions elsewhere.<\/p>\n\n\n\n

Make a Budget<\/h2>\n\n\n\n

Now that you\u2019re earning money, it\u2019s time to make a smart plan for what to do with it. Budgeting allows you to dedicate enough funding towards your needs while giving you room to save and spend with the rest. Without a budget, you risk overspending and not being able to cover the necessities.<\/p>\n\n\n\n

\u201cYou should always know where your money is going because otherwise, it is all too easy to lose track of it,\u201d noted Donna Tang, budgeting expert at CreditDonkey<\/a>. \u201cWhen you see where all of your money is going and how much of it is going to which things, you will be a lot less likely to spend money frivolously.\u201d<\/p>\n\n\n\n

New to budgets? Check out this free budgeting worksheet<\/a> and our piece on 50\/30\/20 budgeting<\/a> to get started.<\/p>\n\n\n\n

Create an Emergency Fund<\/h2>\n\n\n\n

Most 20-somethings feel financially vulnerable. After all, if you\u2019re just starting to earn an income and juggling new expenses, a surprise medical bill or car repair can suddenly put you in the red. Prepare for the unexpected in advance by putting money aside for your emergency fund<\/a>. <\/p>\n\n\n\n

Many experts recommend setting aside three to six months of your living expenses for your emergency fund, but this can be a tough savings goal to reach when you\u2019re just starting out on your own. Try starting with a savings goal of $1,000 \u2014 once you\u2019ve hit that milestone, you can continue to work towards a larger cushion of savings.<\/p>\n\n\n\n

Minimize Your Debt and Make a Debt Repayment Plan<\/h2>\n\n\n\n

Many young adults incur debt in their twenties. Between student loans, new credit cards and the costs that come with living on your own for the first time, you may find your debts growing into a mountain in a very short time period.<\/p>\n\n\n\n

The best way to stay on top of your current debt is to make a clear repayment plan. Use tools like credit card<\/a> and student loan<\/a> payoff calculators to help you determine how long it will take to pay off your debt. Consider utilizing a debt repayment strategy to tackle your payments as quickly as possible, such as the snowball or avalanche method<\/a>. If you\u2019re still struggling to see a clear way to pay back what you owe, you may also benefit from debt help<\/a>.<\/p>\n\n\n\n

As for avoiding future debt? The key is to live below your means and spend less than what you make. If you find that you\u2019re living paycheck-to-paycheck, look for ways to trim down your monthly spending so you can divert those leftover funds towards your emergency fund and your future financial goals. <\/p>\n\n\n\n

Build a Solid Credit History<\/h2>\n\n\n\n

You may not be ready to take on a mortgage or a personal loan in your twenties, but building a good credit history now can help you secure better terms when you\u2019re ready. <\/p>\n\n\n\n

\u201cLenders like to see a strong history of borrowing and repaying debt before they approve a loan, and people with no credit history may be forced to accept a higher interest rate, larger down payment, or be ineligible to access credit.\u201d explained Timothy Iseler, founder of Iseler Financial<\/a>.<\/p>\n\n\n\n

Need more help building your score? Check out our 10 part guide to building credit with no credit history<\/a>.<\/p>\n\n\n\n

Start Saving for Retirement <\/h2>\n\n\n\n

Retirement seems so far away when you\u2019re just starting your career, but it\u2019s important to start preparing as early as possible. 401(k) and Roth IRA savings benefit from time, even if you\u2019re only able to make small deposits at the start.<\/p>\n\n\n\n

\u201cThanks to compound interest, the earlier you start investing, the more time your money will have to grow in value,\u201d said Anna Barker, founder of Logical Dollar<\/a>. \u201cThis means that, over the course of your life, you\u2019ll actually have to invest less of your own money in order to reach an amount you need to retire.\u201d<\/p>\n\n\n\n

Many employers offer to match some or all of their employee\u2019s 401(k) contributions up to a set limit. If you\u2019re eligible for your employer\u2019s 401(k) match program, try to contribute enough to take full advantage of their match \u2014 it\u2019s essentially free money! <\/p>\n\n\n\n

For example, let\u2019s say that your work offers a dollar for dollar match on the first 5% and you make $35,000 a year. If you commit to contributing $1,750 of your salary each year to your 401(k), your employer match will mean that your 401(k) is actually getting $3,500 a year.   <\/p>\n\n\n\n

Get Insured<\/h2>\n\n\n\n

Accidents and emergencies can take a major toll on your finances if you aren\u2019t adequately insured. As you start to make your way on your own and become more independent, you\u2019ll need to determine what kinds of insurance you\u2019ll need. In certain cases, such as renting a home or driving a car in some states, insurance is mandatory.<\/p>\n\n\n\n

If you\u2019re covered under a parent\u2019s insurance plan, you may choose to stay on their health insurance until you turn 26<\/a>. Aside from health coverage, Business Insider<\/a> recommends that 20-somethings also obtain auto, renters and disability insurance.<\/p>\n\n\n\n

If your workplace doesn\u2019t offer life insurance, it may be a good idea to purchase a policy while you\u2019re still young and healthy. \u201cBy doing so, you have the ability to lock in extremely cheap prices for life insurance,\u201d explained Matt Schmidt, CEO of Diabetes Life Solutions<\/a>. \u201cThose who put off purchasing a policy run the risk of developing a health condition that may cause premiums to be higher.\u201d<\/p>\n\n\n\n

Get Your Documents in Order<\/h2>\n\n\n\n

When you leave your parent\u2019s nest, both physically and financially, don\u2019t forget to pack the paperwork. Make sure you bring any important documents and identification with you and store them in a safe, secure place. Important items in your possession may include:<\/p>\n\n\n\n