Your 20s will prove to be some of the most exciting and rewarding years of your life. These are the times to get a fresh start on life, get a job that pays well, go into business for yourself, perhaps start a family. There are a few important milestones you can expect to reach during this decade when it comes to providing a clear financial future. Let’s take a look at some of the major ones.
- Start a Retirement Fund
Retirement may seem like a very far-off prospect but trust us, it comes faster than you think. Plus, the earlier you start saving, the bigger nest egg you will have come age 65. Your money has decades to grow, and you can maximize those dollars by fully utilizing your company’s 401 (k) match. Many experts agree starting a retirement fund should be a priority at this age, even over paying down those student loans.
It’s just plain easier to save for retirement now. You can choose to sock away 10 to 15 percent of your income now or wait and save 25 percent in your late 30s or 35 percent in your late 40s for the same result, says The Washington Post. Invest conservatively in stocks at first, and establish a relationship with a proven stockbroker fraud lawyer.
- Establish an Emergency Fund
Studies show that 18- to 29-year-olds have nothing saved for a rainy day. That means many young people your age won’t have any money to fall back on in the event they are laid off, face a medical crisis, or just need to repair the car. It’s recommended that single people have at least six months of expenses and married couples at least three months saved in a liquid account. Open a separate bank account and add to it through direct deposit, say, $100 a month to start.
- Pay Off Credit Card Debt
The debt you incurred as a student should be paid down as much as possible before you make any big investments such as a house. Credit card debt is considered a high-rate debt, and this is the kind you should be getting rid of first over lower-rate debt like school loans. Pay more than the minimums on your cards and get them down to reasonable balances. Don’t miss payments, in order to start building up solid credit. By letting debt pile up, you’re dragging down your net worth.
- Build Credit
In your 20s, it’s important not only to build credit but to keep an eye on it regularly as well. Even though you’re making regular payments on your student loan payments and credit cards, you need to go the extra mile to ensure you give a boost to your credit score. Check your reports at least once a year (the three major credit reporting agencies allow you one free one annually) so that a bill you forgot to pay four months ago is not dinging your score. Only about a third of people your age pull their credit reports yearly. That’s a mistake. Do it often and stay on top of it.