Financial Planning Advice for 20-somethings | Richard Banks & Associates, P.C.

Our team at Richard Banks & Associates, P.C. knows that when you’re fresh out of college there are many exciting things that lie ahead of you: embarking on career journeys, moving to a new town, getting married, starting a family, the possibilities are endless! While enjoying all that life has to offer, don’t forget to remember the importance of financial planning!

When just getting started out, keep in mind that your wealth in your 30s and 40s is set up by decisions you make in your 20s. Here are some tips to take to heart so that you’re making the best possible decisions financially.

1. Be wise about housing. It may be tempting to move into some swanky new digs, but don’t ignore the option of staying with mom and dad if possible. While it may not be ideal, it does give you the chance to pay down any debts you may already have (hello, student loans) and save up money for either a down payment on a home or deposit for an apartment. Also, be open to the idea of having a roommate. Your independence and privacy are important, but so is having money to live on!

2. Control your spending. With that new job comes probably the most impressive paycheck you’ve ever seen. It might be tempting to go out and buy a new car, some new clothes, a better TV, etc. Check your budget and ask yourself if you really need those things. A good rule of thumb is to wait 72 hours before making any impulse purchases. Also, don’t nickel and dime yourself into an empty bank account! Track how much money you’re spending on eating out or purchasing minor, unnecessary things.

3. Use credit cards the right way. Don’t rely on a credit card to make your regular purchases, like clothes, entertainment or gas. Being able to pay it off each month can help you build credit, but it’s far too easy to fall into that debt trap. Instead, try to keep the credit card strictly for emergencies, major repairs or budgeted travel.

4. Realize the value of saving now. Too many Americans don’t even have $1,000 in a savings account, but there’s no reason for you to be one of them! It may seem way off, but the time to start saving for retirement is upon you. Start small, with 1 percent of your income, and then gradually increase it by another percent. If you follow this plan, you’ll be saving 10 percent of your income by your 30s and 20 percent in your 40s.

You’re embarking on a new adventure in life, and we know how exciting that can be! We also know how easy it is to be tripped up by debt, so much so that it can overwhelm your entire life. If you find yourself in an unmanageable money situation, Richard Banks & Associates is here to help you get things back on track!