By: Sammi Coppedge, Marketing Assistant
When you are young, finances are scary, bills are overwhelming and overdraft fees sometimes become the norm. However, it doesn’t have to be like that. Finances in your twenties can be successful and prosperous. That’s where we come into help. We’ve put together our top 5 financial tips that we believe every twentysomething person should know.
Save a little bit at a time
What many twentysomethings fail to realize is that every penny saved really does count. Whether you are saving towards something specific, or you are just saving to save, the important thing is that you are not spending every dime that you earn. However, one great habit twentysomethings can start now is saving towards an emergency fund. This could be used in times of crises, such as when dealing with car troubles, an illness or if you are laid off from your job.
While the more money you can save the better, you should start out by setting smaller goals first. If you told people to save $20,000, they would never do it. However, setting a smaller goal like $1,000 is much more attainable. Whether you are able to put away $25 a paycheck or $100 a month, you will be likely to attain those goals quickly. Only bite of what you can chew.
Your credit score does matter
A common myth is that if you’re young, then your credit score doesn’t matter. However, no matter your age, you should care about your credit score, as it will affect your future.
One thing that twentysomethings can do is open a low limit credit card. Your first credit card should be used as a credit building opportunity, more so than anything else. First time credit card users should be particularly mindful of how much they put on the cards. One great way to make sure you are not spending more than you can pay back, is by only putting small purchases on the card, like gas or groceries. Set an amount that you should never go over each month, that way you are able to pay off your balance each month and not pay interest.
Building your credit now will help you in the future. Whether that be when you go to purchase your first car or home, the important thing is that your credit score will be high enough for you to purchase the things that you want. Don’t wait until you go to make your first big purchase to work on your credit score – do it now so you can have what you want later!
Be responsible and frugal with your money
Even if you are young enough that you don’t have a massive amount of bills, there is no time like the present to start learning how to be smart with your money. One way to do this is by creating a budget and setting maximum spending limits on particular items. If you know you’ll be going out to eat with your friends one weekend, go into it knowing that you don’t want to spend more than X amount. Predetermined plans will help with alleviating overspending.
Another great way to be more responsible with your money is by always being on the lookout for sales and coupons. At a majority of retail stores, merchandise will go on sale at some point. Just because you have fallen in love with the perfect sweater doesn’t mean you should by it on the fly. Through waiting for a few weeks, you will usually get the better end of the deal.
Also, get involved with company rewards programs. A lot of retailers have apps where you can track spending, current coupons, and redeem rewards. The best part is that more retail rewards programs are free of charge! Just be mindful of signing up for retailer credit cards that get you a certain percentage off. Although they are great, don’t sign up for every retailer credit card that comes your way, as it could get you into some trouble.