Personal Finance Tips for Young Professionals Starting Their Career
27 Jan 2020
Young millennials (between the ages of 18 and 24) have less than $1,000 in their savings account. Nearly half don’t have anything saved.
Set yourself up for success (and for retirement). With these personal finance tips, you can start saving for your future, a rainy day, or the home of your dreams. Otherwise, you might find yourself drowning in debt and unprepared for the future.
Make a plan! Get started with these seven financial tips for young adults.
1. Set a Budget
Before using the rest of our personal finance tips, it’s important to set a budget for yourself. Sit down and take a look at how much you make each month. Then, review your monthly expenses.
Separate your budget into different categories, such as transportation/gas, entertainment, groceries, and other monthly needs.
Then, set a budget. Setting a monthly budget will help you see how much you’re saving and spending each month.
2. Create an Emergency Fund
Failing to set aside a budget for emergencies and unexpected expenses could cause you to resort to high-interest borrowing options. Instead, create a fund and add a little every month. You can use an automated savings plan to keep adding to your fund regularly.
Try to save three to six months’ worth of your expenses for an emergency.
3. Start Saving for Retirement
The average American millennial makes $35,592 a year. While retirement might seem distant, it’s important to start saving now. Long-term, tax-deferred growth can help.
Try to save 15% of your income into a 401(k). If your employer doesn’t offer one, max out a Roth IRA.
4. Diversify Investments
Consider putting your money in various investments. Diversify between accounts.
Don’t be afraid to get aggressive with your investment portfolio! You can speak with a professional financial advisor to make a plan and explore opportunities.
5. Build & Protect Your Credit
As you use these personal finance tips, make sure to build a positive credit profile. Protecting and build your credit can help you avoid potential problems.
Make sure to check your credit record to catch mistakes and fraud, too.
6. Address Debt
Today, more people are entering the workforce with debt already on their shoulders. For 20-somethings, student loan debt and high-interest credit card debt are big issues.
As you make a plan using these personal finance tips, make sure to prioritize paying off your debts. The long-term rate of return on your savings is probably lower than the long-term cost of carrying high-interest debt.
Pay off your debts with the highest interest rates first.
7. Think for the Future
Many budgeting tips for young adults involve planning for the future. You might only focus on building an emergency fund or your 401(k). However, you should also consider creating a will, looking into a life insurance policy, and estate planning, regardless of your age.
These personal finance tips can set you up for long-term success.
Start Your Career Off Right: 7 Personal Finance Tips for Young Professionals
With these seven personal finance tips, you can enjoy life without debt slowing you down. Instead, you can remain financially smart. Start your career off right with these tips.
You don’t have to go it alone. Contact us today to schedule a meeting!