Your twenties are when you start experiencing what living in the real world is all about. For many, this is when you graduate college, start earning a consistent income, get your own place, and start doing things on your own.
Your twenties are also a time when you should be setting and working towards some very important financial goals to ensure your long term financial stability.
So, youths, let's talk about this:
1. Start saving for retirement.
Once you start earning a consistent income, one of the first things you should do is start contributing to a retirement account. Either an IRA or through your employer's 401(k) program, just get going. Starting early with your retirement savings gives your money the opportunity to grow and take advantage of the magic of compound interest.
2. Start an emergency fund.
The whole point of having an emergency fund is to help you weather unplanned circumstances. Having a stash of cash to fall back on when "life happens" means you won't have to rely on credit or rack up debt to resolve your emergency situation. Start with a goal of saving three months of your basic living expenses and then increase your goal to six months. No amount is too small to save!
3. Pay off and minimize credit card debt.
It's a good idea to start getting rid of any credit card debt you have acquired. Racking up debt takes away from your ability to save money. Build your debt payoff plan into your budget and pay it off as soon as you can.
4. Start paying off your student loans.
Student loan debt is a burden that many carry. If you have this type of debt, the sooner you get ahead of it, the quicker you can get rid of it. A lot of people make the mistake of not prioritizing their student loan debt because the interest rates are low or the loan can be deferred - it is important to recognize that this is still debt that you are responsible for. Deferring it or making interest-only payments increases the length of time and the amount you'll fork over. Create a plan to start paying off your student loans and get of them!
5. Start saving for other major goals.
If you intend to buy a home, pay for a wedding, or pursue an advanced degree you need to sock away cash. Just like with your debt repayments, build your savings goals into your budget. Don't be afraid to set and rework your goals — things happen! You'll go down many paths before you choose the right one, the most important step is the first: being prepared.