09 Apr How to Manage Your Money in Your 20’s
When it comes to money, today’s 20-somethings have to grow up fast.
Between student loans, pressure to start saving early for retirement and expensive housing, rentals, those first paychecks are in demand and there’s little room for error. Here are 5 tips for getting on top of your finance in your 20s.
Tip 1 – Ignore your salary.
Changes are your new job requires a new lifestyle, which can be pricey. You probably need professional cloths, perhaps a new car and a place to live. We recommend that you continue to live like a broke college student even after you are gainfully employed, at least until you get a better handle on all those new expenses 🙂
Top 2 – Consider living at home.
You certainly wouldn’t be the only one to do so; around 85 percent of new grads move back home with mom and dad, at least temporarily. Living at home can give the financial flexibility you need to store up your finances, make a plan for paying back student loan debt and creating a budget you can live with.
Tip 3 – Limit credit card debt.
Credit card debt can easily build up after college – when expenses rise, but you’re still making do on a starting salary. Credit cards also carry high interest rates and fees if you don’t make on-time payments. Other than true emergencies, it’s best to avoid credit card debt altogether, but to keep the plastic in your wallet for the times you might really need it.
Tip 4 – Pay off any debt you do have
While your goal should be to pay off each card in full each month, that might not always be possible. If you’ve build up some debt, then start paying it off as soon as possible. To decide which card to pay off first, CEO Bill Hardekopf suggests chooding the one with the lowest credit limit, since exceeding the limit can tack on extra fees and damaage your credit rating.
Tip 5 – Put student loans on autopilot
While you want to be sure to make all monthly payments to your student loan provider, there’s not usually any need to fast track those payments. In other words, you can continue to make slow and stteady monthly payments through the life of the student loan, unless it has an unusally high interest rate or you have the extra cash to spare to pay off the debt altogether.