6 Smart Decisions 20 Somethings Can Make to Improve Their Financial Futures


You experience numerous changes and setbacks during your turbulent 20s. You might graduate from school, climb the corporate ladder, start a family, and experiment with investments. If you want to shape a bright financial future, however, your 20s offer an opportunity to get the ball rolling early.

1. Borrow Money and Pay It Back

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Twenty-somethings start their lives by purchasing cars, homes, and other big-ticket items. Unless you enjoy access to a sizeable trust fund, you’ll need a decent credit score to make these purchases. Make an effort to open both revolving and installment accounts to establish your credit history.

Since 20-somethings often abuse credit, set limits for yourself. If you carry a credit card, for example, record sales totals in your checkbook register each time you swipe plastic at a store. When your statement arrives, pay the entire balance — it won’t seem like such a big deal because you’ve already accounted for the payments in your checking account records.

2. Continue Your Education

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You’ll find it easier to return to school in your 20s than later in life because you’ve just graduated college. The study habits required for effective education remain fresh in your mind. Pursue a master’s in political science, for example, if you want to give your political career a boost.

3. Start a Rainy Day Fund

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Open a savings account at your bank and link it to your checking account. Determine how much money you want to save each month, and then automatically transfer an appropriate percentage of each paycheck into the savings account. It creates an instant rainy day fund.

Determine the specific circumstances in which you might withdraw money from that account. For example, you might dip into your savings for car repairs or medical expenses, but not for a vacation or a new television.

4. Evaluate Your Spending Habits

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Set aside time at least twice a year to crunch the numbers. Create a list of your expenses, then compare them to your income. Determine how much money you owe, and create a plan to repay it as quickly as possible. If you develop these healthy financial habits in your 20s, they’ll stay with you for decades.

5. Insure Yourself (and Your Belongings)

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Insurance remains an integral part of financial responsibility. Insure your health, your car, your home, and all of your valuable possessions. If you haven’t bought a home of your own, never sign a lease without renter’s insurance. Evaluate your policies every year, and switch to new providers if it makes financial sense, but never think of insurance as a luxury — it’s a priority.

6. Keep Meticulous Records

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Purchase a used filing cabinet off eBay, or pick one up in the discount section at an office supply store. Keep your banking records, tax documents, and other paperwork organized in case you need them. Set up a schedule for document disposal, and stick to it.

You might make financial mistakes in your 20s, but don’t let setbacks slow you down. Instead, focus on obtaining an education, creating a profitable career, and managing your money as wisely as possible.

Author Bio: Boris Dzhingarov graduated UNWE with major marketing. Boris is the founder of MonetaryLibrary and Dzhingarov.com.

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April 28, 2015 6 Smart Decisions 20 Somethings Can Make to Improve Their Financial Futures