Personal Finance in your 20s
In your 20s there is an increasing demand on those paychecks with student loans to pay off, pressure to start saving for retirement and the expense of living. Here are some great tips to stay on top of your finances in your 20s.
Don’t Change How You Live
Your new job will usually require a new lifestyle that can be expensive. You will most likely need new office clothes, a place to live and maybe a new car. It is recommended that you can carry on living though like you are still a broke student even after you are employed. This gives you a chance to get a better handle on these new expenses you are faced with.
Live at Home
There are many graduate students that end up moving back home temporarily. Living at home will give you some financial flexibility where you can weigh up your finances; make a plan to pay student debt back and to create a budget that you can live in.
Limit Credit Card Debt
After college, credit card debt can easily mount up especially when expenses rise but you are still on a starter salary. Credit cards have a high interest rate and fees if you fail to make payments on time. It is best to avoid credit cards unless there is a real emergency.
Pay Off Any Debt
It might not always possible to pay off your debt in full every month. If you have some debt to deal with then you need to start paying this off as soon as possible. Start with the one with the lowest credit limit as you can damage your credit rating and be charged fees when you exceed the limit.
Put Student Loans on Autopilot
There isn’t much need to fast track the payments you need to make on your student loan. Make slow and steady payments each month for the term of the loan. If you do find you have extra cash then you can use this to pay the loan.
Ensure that you have rental insurance, health insurance and even life insurance because an accident or illness can become a massive problem and take their toll your finances if you are not covered.
Long Term Goals
Having big goals like buying a home can motivate you to start saving for it. You can then take advantage of compound interest and reach your goal a lot sooner.
Save for Retirement
You may think that retirement is years away, but saving as soon as you get your first job will make it easier for you to reach your retirement goals before the day arrives.
If you would like help with your personal finance, head to FinanceMan.