8-1/2 Financial Tips for People Under 30

You know those articles you read about what people in their 40s, 50s and 60s would tell their 21-year old selves to ensure they live a happier life? It’s amazing how many bring up being smarter about personal finance. Many people make financial mistakes, but they’re often mistakes that can be worked out over time. It would be nice to get advice on how to avoid as many as possible.

So, for our 20-somethings audience—or if you have 20 somethings in your family—here are some financial tips everyone should master in their 20s that will make adulthood a whole lot more fun.

1. Avoid the three most dangerous words in the English language: “I’ve got time”

When you hit your 20s, you feel invincible like Superman or Wonder Woman, and your future often looks limitless and bright. But you turn around twice, and suddenly you’re staring 30 right in the face. Throw in a potentially serious relationship or marriage, a mortgage, car payments, medical and life insurance, and maybe a kid or two, and your life changes fast.

Don’t take the “I’ve got time” attitude with anything that’s important. Financially, start planning for your future. Get your spending under control early when it’s easy, and you have fewer obligations.

Most of all, start investing in your retirement—even if it is 40 years or more away—by putting away a small percentage of your paycheck. It’s stunning how much you’ll benefit later simply from socking away some money now.

2. Take a personal finance class

I admit that this may not sound like party time. However, the truth is this may be the most important class—or classes— you take outside of your major. If you’re still in college, I can guarantee you have access to personal finance classes and resources at your school. If not, there are many great options you can take online or at a local community college. Also, several financial institutions provide them as well, but just go in knowing at some point, you’re probably going to hear a sales pitch. However, it doesn’t mean the information is wrong.

3. Learn to monitor your credit history 

Outside of being a trust fund baby, there’s NOTHING more critical to being an adult who wants to buy stuff than having a good credit history. Your credit report is your history of using, or abusing, your credit. By law, you can ask the three major credit reporting bureaus (Equifax, Experian and TransUnion) for one free copy of your credit report once a year. Use the site AnnualCreditReport.com to access your reports, and learn all the credit information you need from one site.

When you get your report, check all the information carefully. If you find any incorrect or mysterious information you’ve never seen before, you can contact the bureau and have it removed. I remember not checking mine for about five years, and when I did, was very surprised to find out that Equifax had me living in Texas at one point. And I’m not even going to go into how many things TransUnion had wrong. 

4. Set your financial goals

Do you want a house, spouse and kids? Travel to the world’s most interesting or exotic places? Or, have $2 million saved up for retirement? How about being able to pay all your bills every month and still have enough left over to have fun, buy some stuff WITHOUT having to ask the price, and get away to someplace cool once a year for vacation? Whatever YOUR desire is, you absolutely won’t get there without setting some goals and planning to achieve them. 

5. Safeguard your financial future with insurance

I’ve known too many 20-something Supermen and Wonder Women that feel invincible and don’t invest in life, health or property/renter’s insurance, and they only have car insurance because the finance company or their state required it. I fervently wish I could promise you that you’re right, but if nothing bad ever happens to you, you will be the first person in history to accomplish that feat. Get insured to protect your financial future. No matter what the premiums, they’ll be a lot cheaper than fixing things afterward.

6. Save for retirement

If your company has a retirement plan, take advantage of it, but don’t rely solely on that. If nothing else, open an IRA separately from your employer. It can be a Traditional IRA, a Roth or whichever makes sense for you. Here is a terrific article from MoneyUnder30.com to help you get started.

7. Create a budget and stick with it

Budgets are essential if you want to stop sweating and living paycheck to paycheck. Luckily, budgets are like time management systems in that there are a bunch of apps, software, and systems available to choose from. You can play around with different ones until you find one that works for you. But … find one and use it. That way you’ll always know how much money you have on hand and how much cash flow you REALLY have versus how much you THINK you have.

8. Write a will

Hey Clark Kent and Diana Prince … you’re young, not immortal, so write a will.

Without getting into specifics—mostly because each state has its own set of regulations about estates, probate, and intestate distribution—you need to have a will written no matter what your financial situation is. In short, a will allows you to:

• Speak when you're no longer able to speak  
• Provide for the welfare of family and/or friends 
• Pass along your assets as intended  
• Arrange for the management of your property      

For one thing, it’s invaluable for ensuring your heirs follow your wishes after you die. Second, and maybe most importantly, it can save your family and loved ones a tremendous amount of stress during one of the most devastating times of their lives—your death.

Better yet, a will can keep the government out of your business and your family’s pockets, which will happen if you die without one (intestate). If you have kids, your will allows you to determine who takes care of them. You can create a legal will online or find a good lawyer who can help you.  

8-1/2. Start doing all of this today

Enough said.