Five Finance Tips for People in Their Twenties

For those of you about to enter your twenties, you no doubt the feelings of pride and excitement associated with official adulthood. Maybe you have finally struck out on your own with a great job and an apartment, or perhaps you’ve decided to enter graduate school to further your education for something better. While retirement seems a millennium away, this is still a good time to think about the future and your current financial health. You want to start saving now to have something forty years later, regardless of the state of the economy. The habits you begin now toward fiscal responsibility can definitely help you through life.

What can do you now to ensure a secure future? While these tips may not guarantee you riches and early retirement, they may help you with money management as you graduate to better-paying jobs.

1) Don’t go overboard! Once you leave the relative comfort of your parents’ home, you may be tempted to go a little wild with regards to obtaining possessions. You get approved for credit cards and you begin receiving regular paychecks, and your first inclination is to spend. Of course, you will need the essentials like food and clothing, but try not to live beyond your means. Don’t spend money just because you have it.

2) Do establish good credit. Talk to anyone in your family, and you may hear horror stories about biting off more than was chewed when it came to managing credit cards. Establishing credit is important if you plan to make a large purchase in the future, like a car, but don’t feel as though you have to apply for every card under the sun. You don’t want to become so dependent on credit that you charge for everything you need and suddenly run up an enormous debt. Keep credit charges to a minimum, look for cards with low interest rates, and try to pay off purchases as quickly as possible.

3) Choose practicality over flash. This is especially important when looking into buying a car or renting an apartment. Naturally, more upscale items are going to cost you more, and if you earn only so much at work you may find yourself working solely for the rent and car payment. Yes, it would be nice to jet around town in that convertible, but if the less expensive sedan gets you where you need to go, make the wiser decision.

4) Sock it away for later. When you get your job, enroll in the company’s 401(k) plan and begin investing now. If possible, offer up the maximum contribution into the plan for a good head start. If your job doesn’t come with this benefit, open an IRA account and put a little of your paycheck away each time. This money will grow over time for your retirement.

5) Accept responsibility for your finances. It is tempting, when you feel you’re in a bind, to ask Mom and Dad for help. While they may be willing to cut you a quick check, you don’t want to make that a habit. Learn to solve your financial matters and you’ll be prepared for challenges to come.

Kathryn Lively is a freelance writer specializing in articles on Norfolk bankruptcy lawyers and Virginia bankruptcy lawyers.

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