Your 20s are a defining time in your life. Having your finances together becomes more necessary as college becomes a thing of the past and adulting becomes reality. It’s the time where you set the stage for your future. Starting off your adult life on the right foot is essential, financially, as I firmly believe that it will come back and haunt you if you don’t.
Although I haven’t said good bye to my 20s just yet, I have made plenty of mistakes along the way and are now playing recovery as I work on getting us out of debt once and for all. My husband and I have tackled building our emergency fund in only three short months, building up our savings account all while tackling the student loans we acquired over our college careers.
If you’ve started out on the wrong foot, don’t stress. It’s not too late to make the changes you need to and set yourself up for financial success.
Create a Budget
Understanding where your money is going, how much you spend, how much you save is KEY in getting your finances in order. I know I’ve talked about it many times but Mint is a free budget software that can connect to your accounts. It’s a great, non-intimidating way to start, in my opinion. It shows you what you spend on food, clothes, coffee, bills and more. For me, this was eye opening as I was spending SO much on groceries specifically that it was sickening.
Creating a budget that works for you does not have to be complex. Some people prefer dollar amount budgets, I personally use percentage budgeting.
It might sound silly to start saving when you have debt to pay off, but being prepared for any emergency expenses is necessary. Having an automated deposit from your pay check is one easy way to do this. As for how much you want to save, that is up to you to determine, but I do recommend setting aside enough for at least two months worth of expenses. Beyond setting up automated deposits from your paycheck, Digit * is another great way to save. I do this on top of my automated deposit into my savings account. Digit is an app that moves money from your checking to savings account based on your spending patterns. Since I joined in mid February, I have saved an additional $209.40!
It’s easy to “forget” about some of the debt you might have acquired over the years. Store cards, college loans, credit cards, car loans, can add up really quickly. You need to be real with yourself. You are not doing yourself any favors by “forgetting” about some things from your financial past. Roll up your sleeves and collect every bill or every log-in account you have that has to do with finances and add it up. This part can be scary yes, but it’s the only way to plan for success.
Pay On Time
Creating a plan to get out of debt should include paying what you can, on time. Although you might not be able to throw hundreds of extra dollars on top of your minimum payments, you want to be on time. If you have enough extra to pay more on one, you can consider paying more on the bill with a higher interest (pay more over time) or maybe you just want that small store card to be over and done with. Regardless, be punctual.
Don’t Give Up
Lastly, don’t give up. It can be daunting and you might feel like you’re the only one out there trying to find your financial footing, but you’re not alone. In 2012, 71% of students had loan debt (source), YIKES. What can and will set you apart from those who never recover is that you’ve recognized that something has got to change, now is the time to change it. It might take some sacrifices along the way but it will be worth it.
Setting a standard for your financial freedom is key in your 20s. It’s the time to recover from past mistakes, shake the past off and start building a financial future that can support yourself and your family for many years to come.
What item is top on your list for paying off? How do you plan on doing it? Share below!