NDSU Extension Service - Ramsey County


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Financial Do's and Don'ts for Twenty-Somethings

Financial Do’s and Don’ts for Twenty-somethings.


          As a twenty-something with your first big job out of college, managing your finances for the first time can be overwhelming. Everything from increased daily expenses from living in a dorm to living in an apartment to major costs such as college debts and long-term goals can be overwhelming.

          Managing finances well is a skill set that can make your future much brighter. Building habits, especially in your twenties, is extremely important for long-term success

          Start with establishing a budget.  Without a budget, you risk overspending on discretionary items and under saving for important big-ticket purchases. Begin by itemizing all your daily expenses (such as commuting costs and food bills) and recurring monthly payments (rent, utilities, debts). When you know where all your money is going, you can more easily see how to cut costs.

          Have a debt-repayment plan. Debt for college is a reality for most young adults. But letting it linger—or, worse, grow—can set you back for years to come in the form of greater interest payments and lower credit scores.

          Build an emergency fund.  Call it a rainy day fund or whatever you like but have dollars on hand for unexpected emergencies of water heaters, damage to the roof after a storm ( insurance doesn’t cover everything) Most financial advisors recommend stashing enough to pay three to six months' worth of expenses in a safe and easy-to-access savings account.

          Start saving for retirement. Retirement seems like a distant dream to a twenty-something but as life spans increase, it's more important than ever to focus on this savings goal as soon as possible. Use the magic of compounding to increase your retirement fund. For example, if a 25-year-old saves just $100 a month, assuming an 8% return and quarterly compounding, she'll have $346,039 by the time she turns 65.

          Locate your key document. You—not your parents—should have your birth certificate, Social Security card, car registration and title and other official IDs in your possession. Also keep a list of all your banking and investment accounts, household bills and insurance policies, along with any online usernames and passwords. Store all this important information in a secure place, such as an actual safe, and make sure someone you trust knows where it's located.

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