Chris O'Shea
Your 20s are an important time for your finances. This is the time to set yourself up for long-term financial success. Here are some money moves you should make when in your 20s.
Start a Budget
If you don’t have a budget, now is a great time to get started. You don’t have to go the old-fashioned route of creating a spreadsheet or writing in a notebook. Though if that’s what you want to do, go for it. The good news is that there are many apps that you can use to create a budget and then stick to it.
Basics of Budgeting. Compare your income to your expenses. If your income covers your expenses and you’re able to save a little for emergencies or retirement, you’re in pretty good shape. If your income doesn’t cover your expenses, you’ve got a couple of options. Increase your income or cut your expenses.
Review Your Budget. If you already have a budget in place, review it regularly to ensure it still makes sense for your situation.
Build Credit
Now is the time to build your credit. The higher your score, the better your loan terms for credit cards, auto loans, and mortgages. If you haven’t established a credit file yet, there are a couple of things you can do:
Become an Authorized User. Ask your parents about becoming an authorized user of one of their credit cards.
Secured Card. Ask your financial institution about the secured credit card options. This is a credit card secured by a deposit you make. You spend and pay back the card, and this helps you establish credit.
If you do have a credit card, pay the balance in full, on time every time, to maintain a good score.
Get a Fund
Start an emergency fund to help cover unexpected expenses. The goal is to have enough to cover six months’ expenses in case of job loss, natural disaster, illness, or other unexpected events. It’s okay to start small. The important thing is to save as much as you can each month.
Do One Thing: Use a budgeting app to make budgeting and saving as easy as possible.
Jean Chatzky
