College degree? Check. Job? Check. Friends, family, and fun? Check. Sounds like the perfect life for a 20-something. Are you missing anything?
Well—if you’re like many, your finances might be in want of a little more attention than you’re giving them. At this stage in life, it can be easy to push off thinking about money until later, or to spend your (limited) extra cash on things you want now rather than on longer-term investments like retirement .
But to set yourself up for success in the future, there are a few financial goals you really should start today. Don’t worry—they’re all goals you can work toward no matter what you’re making. And, best of all, they won’t leave you feeling deprived.
1. Get in Control
No matter what your salary or what kind of job you have, you should be (intimately) aware of what you’re bringing in and what you’re spending.
A great first step is setting a budget. Use a spreadsheet like this one to write down your target amount to be spending on each type of expense (groceries, entertainment, house bills) per month. Get into the habit of holding yourself accountable for your spending and making active decisions about where your money should go each month. Take it from me—if you don’t start tracking your money now, you’ll wake up in 10 years wondering where it all went.
2. Set the Right Goals for You
You often hear that if you have money left in your budget, you should save it. But without specific goals in mind that can actually be pretty hard.
So think about what mid- to long-term goals you want to be saving for—whether that’s moving to a new city , traveling the world , or buying a house . For many, the hardest part of this is understanding the difference between what you want and what you feel is expected from you. If your family thinks you should settle down and save for a house while you dream of exploring, you may find it hard to keep your true goals in mind.
Once you know what you want, figure out how you can make it happen. Make a plan of action, including small steps you can take now—putting $50 each month in savings or taking on a side hustle , for example, to save for that trip to Asia—and a timeline to reach your goal. With clear goals and a plan in place, you’ll be much more motivated to stick to your budget and actually save money.
Remember, too, that it’s alarmingly easy to succumb to peer pressure when you’re making financial decisions. So be honest with yourself about the lifestyle you want to lead. You can’t have everything, but you can have what’s important to you .
3. Start Building That Retirement Plan
I know, especially on Monday mornings, retirement feels like a million years away. It doesn’t matter. Now’s the time to start a retirement fund—not later. Even saving a little each month now will pay off more than doubling down on it later in life. Want to learn the power of saving a little bit now? Read this article to learn the power of compound interest.
4. Stay Out of Debt
If you have student loan debt , you might think this point is moot. But it’s definitely not—even if you graduated with debt, you don’t have to accumulate more!
The best way to stay out of the red is to save up 3-6 months of living expenses. That way, if you’re hit with a big, unexpected expense you won’t have to put it on a credit card. And on that note, you should try everything in your power to pay your credit card balances in full every month, even if you have to cut back in other areas. Paying interest is literally putting money down the tube and it’s easier than you think to find yourself with a balance that spirals out of control.
If you need guidance, ReadyForZero (where I work) can help you make a plan to get out of debt .
5. Re-evaluate Often
As you progress through your 20s, your financial situation will likely change multiple times—you’ll get a new job, move to a new place, and have different types of expenses come up. So revisit your goals every quarter to determine where you stand. Are you getting closer? Have any of your goals changed? Are you making more money now that can be put toward them—or does your budget need a rejig based on new expenses?
No matter what the case, checking in regularly will help you stay on track—and that’s the best way to keep getting ahead.
20-somethings, tell us! What are your financial goals, and how are you working to achieve them?