Financial Success 101

Money moves to make before your 30th birthday

Creating a fiscal game plan in your 20s is a clear sign you’re on the road to becoming an Adulting black belt. We sat down with one of America’s leading personal finance experts and host of the popular financial podcast, So Money, Farnoosh Torabi to outline ten easy steps every aspiring Adulting expert can set in motion for a financially stable tomorrow. Even if you’ve had a couple 29th birthdays…it’s never too late to start.

1. SET UP AN AUTOMATIC SAVINGS PLAN

Tuck away 10% of your paycheck automatically and place it in a rainy day account for life's unexpected twists and turns. A savings account with about three to six months of living expenses in it can prevent you from needing to reach for a credit card to make ends meet. Seek out an online bank that offers free ATM withdrawals and no monthly fees, as well as a better-than-average interest rate. Sites like bankrate.com and nerdwallet.com can help with your search. Learn more about savings accounts here.

2. KNOW YOUR CREDIT SCORE

Your credit score (a number between 300 and 850) plays a key role when you’re trying to qualify for a loan with a low interest rate. Think: credit cards, car loans, and when you’re ready—a mortgage. The higher your score is, the lower your interest rate can be, which means more savings in your pocket. You can sometimes check your score for free through your bank, or go to myfico.com to get your official FICO score.

3. FLEX YOUR NEGOTIATION MUSCLE

The earlier you get accustomed to negotiating and asking for more money from your employer, the easier it will become. A 10% or 15% pay raise in your 20s—saved in the bank—can yield tens of thousands of dollars (or more) down the road. Be your biggest financial advocate and avoid leaving money on the table.

4. START A SIDE GIG

Your 9 to 5 job may not be enough to pay the bills and leave you with enough money to shape your desired lifestyle. Making an extra $100 or $150 per week on the side via pet sitting, renting out a spare room, or freelancing can help you more expeditiously erase debt and save some money. Plus, you may build some nice momentum with the side gig and it can end up becoming a full-time occupation. This is how many entrepreneurs get their start! Check out our Introduction to Side Hustling article for how to get started.

Tuck away 10% of your paycheck automatically and place it in a rainy day account for life's unexpected twists and turns.

5. DON'T WAIT TO INVEST FOR RETIREMENT

You may feel as though you have many more years ahead of you to get serious about retirement. You may also feel that you don't have enough money to save for something that's 40 or 50 years away. But don't wait. Your 20s are prime investing time, thanks to compound interest. The earlier you begin, the more money you can potentially have in retirement. If your employer offers a 401(k) or retirement plan, opt in. If your employer offers a match, even better! Invest at least enough to earn the match. Along the same lines, open a Roth IRA, which lets you set aside after-tax money for retirement. The perk is you don't have to pay income tax on the withdrawals in retirement.

6. APPS ARE YOUR FRIENDS

We rely so much on technology for making our lives easier and more efficient. Why not bank on money tools to help us keep tabs on our finances, too? Consider a budgeting app like Mint and a savings app like Digit, which automatically sets aside small amounts of money for you. These apps will help you stay accountable, which is sometimes the trick to achieving your goals. Learn more about budgeting here.

7. PLAN YOUR NEXT FIVE YEARS

Life’s twists and turns are unpredictable so it never hurts to make a plan. Do you want to go back to school? Buy a home? Get married in the next five years? All goals carry price tags, says Farnoosh. The sooner you identify them, the sooner you can start saving for them.

8. DEVELOP A DEBT-PAYOFF PLAN

If you're grappling with college loans, credit card debt or any type of debt, make becoming debt-free a priority. For student loans, speak with your lender to learn about modification or refinancing options. For credit card debt, put bigger payments towards the card with the highest interest rate first (since it's your most expensive debt) and work your way down.

9. WHAT MAKES YOU HAPPIEST?

Take a moment to make a list of what is important to you. Prioritize your savings so that you can put money towards what makes you happiest: travel, professional development, or saving for that dream home. Keep this in mind as you develop a budget and map out your spending. This may also discourage you from making impulse purchases.

10. ASK FOR ADVICE

Hindsight is 20/20 and the more you experience life, the more knowledge and insight you have to offer. Take advantage of the knowledge and experience of those you trust who are older. Their experiences with saving money, paying off debt, buying a house or all of the above can prove to be invaluable.

Taking the time to work towards your financial goals now is easier than you may think. Doing so will also curb money worries and ensure a more stable and comfortable future. Follow these easy steps and you may have more money in your pocket for daily mocha lattes, designer jeans, and when you’re ready… that dream home of yours. Maybe there’s even a self-driving Tesla in your future.

KEYS TO FINANCIAL SUCCESS

Match your employer's 401(k) contributions

Refinance student loan debt

Aim to save 10% of your paycheck

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