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7 Financial Tips to Know in Your 20s

By SDCCU , 26.07.2019 Financial Education
Young adult in front of computer managing their money. 7 Financial Tips to Know in Your 20s
There are many life lessons you will learn, but one of the most import is learning how to manage your money and financial stability. These 7 financial planning tips you need to know in your 20s will help set you up for a beaming financial future by the time you turn 30.
 
  1. Maintain a budget. Identify your goals, calculate your income and monthly expenses, factor in other expenses you may have and make sure to always track your spending. It’s easier to create a budget and stick to it. Set aside time to review your spending regularly and make sure it is realistic to your life. Try online tools like our Money Tracker in Internet Online Banking to easily stay on track with your financial planning goals. Remember to utilize credit cards that give you cashback or perks for things you would already be buying.
  2. Invest in yourself. Reinvest some of your annual income in professional development such as conferences, classes, certifications and other educational resources that will help you move forward in your career and boost your income.
  3. Get ready for the big stuff. Rings, weddings, houses, babies, it all may be heading your way fast. Be sure to talk with your significant other about your money management and goals to make sure you are on the right financial planning track together.
  4. Avoid unnecessary debt. This goes for impulse purchases on your credit card as well as buying that luxury car when a slightly used car may be more in range. Of course, if your budget allows for a luxury car, by all means go for it, just make sure you are keeping your debt-to-income ratio lower than 43% (according to consumerfinance.gov). Also, be sure to pay above the minimum on any current debt. This will help save you money on interest as well as the time it takes to pay any loans off.
  5. Commit to Saving. Adding to your savings account may be the most important part of your budget. However, you may skip it because you’ve over-spent in other areas. To avoid this, automate a set amount from your direct deposit to go directly into a savings account. That way, you’ll always hit your monthly goal. Another sure way to build savings without sacrificing your everyday life style is to save your raises, bonuses and tax returns. Most often when we see that extra money, we have already thought of ways to spend it. Unless your rent is rising or you have a major life expense coming up, chances are you already have a solid budget that won’t miss this extra income.
  6. Create a nest egg. It’s always a good idea to save an emergency fund (try our emergency fund calculator), but don’t forget about retirement savings (use our retirement calculator to see how quickly you can save). If your employer offers a 401(k) plan with matching funds, contribute enough to get the full employer match. Even a small percentage will add up to a significant nest egg decades from now.
  7. Splurge a little. It is all about finding a balance between saving for later and enjoying the now. Allow room in your financial budget for things you enjoy, such as travel, dinning out or hobbies.
While these are financial planning tips you should master in your 20s and before reaching 30, it is never too late to learn how to deal with and manage your money. Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays

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