The earlier you develop a financial plan, the better. In your 20s, you are just starting your career and developing an idea of what you want for your future. Your 20s should consist of a sound financial education, planning for your retirement, paying down your debt, building your credit and avoiding the accumulation of new debt.
1. Build your credit score. In your 20s, you are likely thinking about purchasing your first starter home in the near future. Build your credit score by paying your debt on time and avoiding any unnecessary debt.
2. Pay down your student loans. Student loans are the most significant debt that most people will ever encounter, besides their first home — and sometimes exceeding their home. Get on the right track by paying as much as you can afford.
3. Start your retirement fund. Thanks to the miracle of compounding interest, your retirement contributions matter the most the younger you are. Sit down with an advisor to find out how much you should be setting aside and when.
4. Get rid of your debt. Many people are less than conscientious about their credit spending when they are in their late teens and early twenties. Get rid of that credit card debt ASAP so you can move on!
5. Get your emergency fund going. Before you save money for anything else, you should have an emergency fund that contains at least three months to six months of living expenses (depending on how good the economy is where you live).
6. Start saving for big purchases. Once you’ve figured out what’s important to you — whether it is a house, traveling the world or a big wedding — it is time to start setting money aside.
7. Learn more about investments. It may be a little too early to start investing on your own, but it is about the time that you should be learning about stocks and other forms of investment. Remember, growing your wealth means being diversified.
You can find out more information about developing your personal finance goals by following FMT Advisory. Remember: the earlier you get started, the better.