7 things you should be doing in your 20's

I know you’re young and full of life, but don’t let your money decisions now follow you for the rest of your life. Through my experience in the short-term financial solution industry, one of the biggest mistakes I see millennials make is ignoring their financial responsibilities and not planning for their future. I know it can be a lot to wrap your head around, but small changes here and there will make a huge difference and can save you the headache of having to correct your mistakes in the future.

 

So sit tight, grab a cuppa coffee, (or your favorite cuppa) and listen up to these 7 things that can save you future disaster.

 

Plan for emergencies

This is huge. If there is one thing that will happen to you, it’s emergency costs. If it hasn’t happened yet, it will. Your tire blows out on your way to work, your fur baby needs to be rushed to the vet, or some other budgetly catastrophic event will happen. I guarantee it. I recommend that everyone has at least $1,000 sitting in an account that is separate from your everyday checking. If you’re barely scraping by from paycheck to paycheck I know this amount can seem overwhelming. But luckily, there are so many ways you can start adding up to that $1,000. Start a change jar, direct deposit $25 from your paychecks, or even sell things you have laying around that you don’t use anymore. Every dollar adds up!

 

Start saving for retirement

I know, I know, you’re only in your twenties.. But think about how many times an elder has told you how fast time flies. And they say that to you because it does. You’re young right now, (and I hate to break it to you) but you’re getting older every day. And adding $50 a paycheck to your retirement fund in your twenties is going to be much easier than having to add $500+ a paycheck in your forties to meet your retirement goal. Social Security is unreliable and I see older folks all the time have to go back to work because they can’t make ends meet. A good place to start is to talk to your employer about their retirement plan options. Your employer might even match funds if you have it automatically taken out (hello free money!) This can be a big step that makes you feel overwhelmed with newness, but retirement age you will say “thank you!”

 

Don’t avoid your credit card debt (or don’t accumulate it if you have none)

Receiving your first credit card statement in the mail (or your email) can be nerve wracking. Especially if you don’t know what to do with it. Swiping away your credit card may seem like you're using imaginary cash that won’t link back to you.. but it will follow you.. forever. . until you pay it. If you are going to use credit cards, only use an amount that you can pay back in full before the end of your pay cycle so you can avoid paying any interest. Never rely on your credit cards to be your emergency fund. Pretending your credit card statement doesn’t exist will bite you in the ass when it comes to your credit score (que number #4.)

 

Not paying attention to your credit score

Unless you can save enough money to pay cash for a house, new car, or any other large purchase (which is totally possible), your credit score matters to you. For those in the back looking confused, a credit score is a number ranging from 300-850 that lenders use to evaluate your creditworthiness. It basically tells them whether they should trust you with their money or not. And thanks to many financial crisis’ in our economy, lenders aren’t going to give you money if you don’t have what’s considered a good credit score. Now you see why this number needs to be considered. Every time you borrow money from a creditor or bank, it’s included in that score. With that, every time you miss a payment or ignore a creditor, it’s noted on your credit report as well. Now don’t go super stressing over your credit score. Just pay attention. Make sure you pay your bills on time, check in on your credit score once a month to make sure everything looks as it should (there are some great free online options out there,) and take getting something on credit seriously.

 

Buying a house or vehicle out of obligation

Don’t go into debt because you think it makes sense. Buying a house while you’re young keeps you tied down to one particular place. Enjoy the flexibility of renting until you are totally sure you are where you want to stay for potentially 15+ years. Don’t make quick decisions on vehicle purchases either. Vehicles lose 10% of their value as soon as you drive it off the lot. You might as well make it rain out your window! Tying yourself down with a $200+ car payment each month is a big decision. Save for a vehicle instead by paying yourself that $200+ a month and once you have enough, you just bought yourself a nice car interest free.

 

Taking on too much student loan debt

It drives me nuts that people don’t take this seriously. We are in a student loan debt crisis. I see millennials out there taking on $120K in debt for a degree that gets them a job making $30K a year. It’s just not worth it. Don’t jump into a career decision you aren’t sure about and have to take out more because you switched majors and have to complete a couple more semesters. It’s okay to take your time figuring out what you want to do career-wise. And those thousands of dollars aren’t worth the “college experience.” It is also okay if you find or create a profession for yourself that doesn’t require a degree. You can be plenty successful without the stupidly high price tag of a college education.

 

Living a life you can't afford

Sometimes you want to buy yourself stuff and surround yourself with it. And sometimes your stuff is just that, stuff. And stuff is not worth breaking your budget and bringing you into that cave of stress that is so entrapping. Instead, live a life you can afford. You can still buy yourself things, but you need a healthy balance. Splurge every once in awhile instead of every single pay day. Sleep on purchases of $100 or more to avoid impulse decisions. Every purchase you make takes money away from somewhere else, and that somewhere else could be your electric bill.

 

Now that I have stuffed your brain with all this scary goodness, take a deep breath.

You don’t have to change everything about your budget right this second, or even tomorrow. Pick one thing on here that calls out to you and make that your main focus for the next couple weeks Then add another one in, and then another one, and before you know it you’re a functioning bad ass money millennial!

Samantha Durkee

P.O. Box 48, Boyne Falls, MI 49713