Your 20s are a time of change. Whether you’re just graduating college or a trade school or have a few years under your belt in your career, there’s a lot to navigate—in relationships, jobs, and finances. This is the time when most people begin planning for their futures, and if you know how to manage your money, you’ll find your long-term goals are much more attainable.
Of course, it’s not always easy to keep on top of your plans when you’re struggling to make rent, pay your student loans, and still have enough left over to put away.
To start getting your finances under control and planning for the future, here are some rules to follow:
Know your monthly take-home.
You might know your salary but understanding how much you take home before taxes will give you a much better idea of how much you have to work with each month.
Build a budget.
Knowing where your dollars go each month is the best way to keep yourself from spending beyond your means. It might be tough to buckle down and make sacrifices, but in the long run, you’ll find it’s worth it. When you sit down to budget, consider all your monthly expenses, including recreation and entertainment. Choosing a budgeting technique can be helpful; many experts recommend putting 20% toward savings, 50% toward necessities, and 30% toward personal use. Knowing how you’re spending your money can help you decide if that latté is worth the cost, or if you’re better off grabbing a coffee from home.
Save, save, save.
Your 20s might seem like they’ll last forever, but they won’t. At some point in the future, if you diligently put money away each month, you’re going to be thankful you did. There are two different ways you should be saving, one of which is your regular savings account. This way, you have a financial cushion. You should also be saving for retirement. While many companies offer 401(k)s, if they don’t or you’re a freelancer or contractor, there are alternative options to pursue.
Maintain a healthy credit score.
The best way to maintain a positive credit score is by paying your bills on time. Missed payments can result in a hit to your score as well as annoying calls from creditors. Of course, if you don’t have credit, now is the time to start. Opening a credit card can be a great way to build credit, but you’ll want to pay it off each month—so you don’t end up in more debt.
Get the credit counseling you need.
No matter what, if your financial struggle seems relentless, talking to a credit counselor can make a big difference in your financial future. Credit counselors can help you build a budget that works. A debt management plan can help you lower your interest rates, consolidate your loans into one affordable monthly payment, and pay off your debt in three to five years.
There’s no reason you can’t find financial stability, even in your 20s. You may have to buckle down for a while but planning now can help you lead a more sustainable life and ultimately attain your long-term goals.