9 things 20-somethings need to do to secure their finances

Thoughts Every 20-Something Has About Ageing

When you're in your 20s, and trying to balance school with working and having a social life, you probably don't have much time to focus on your finances. Before you're ready to get a grip on your money, you might make a costly mistake or two along the way.

Becoming financially savvy isn't rocket science, and all that most young millennials need is a crash course in the basics. If you're struggling to get the basics down, or simply don't have the time to figure out where to start, take a look at this list of 10 must-do moves to secure your financial future.

#1. Track Your Spending

Writing down everything you spend might seem tedious at first, but it's a good habit to get into. If you're always running out of money, tracking what you've spent can tell you what's draining your cash the most. Hint: It might be your credit card.

Once you see where your money leaks are, it becomes a lot easier to take control of your spending and savings.

There are tons of apps out there that are geared toward tech-loving 20-somethings, and using them can make managing your finances a breeze. If you need help with tracking your spending, for example, Mint does the hard work for you.

#2. Become a Budgeting Pro

A budget is one of the most important financial tools that every young adult should know how to use. A budget is a plan for what you're going to do with your money each month, and making one isn't as hard as you think.

If you've been keeping tabs on your spending, you're already halfway there. The next step is comparing what you've got going out for bills and other expenses to what you've got coming in.

As long as you have more income than expenses each month you're already ahead of the game. If you're constantly ending up in the red, that's a sign you need to cut back on what you're spending. Sometimes, it can be as simple as skipping that extra latte and opting for a free activity over a day at the mall. Here are some simple budgeting tricks to get you started.

#3. Choose the Right Checking Account

If you've taken out loans to finance your first couple years of college, you don't want to wait until graduation to add up the damage. Take a look at what you've borrowed so far and the interest rate. If you can pay a little each month toward the balance while you're still in school, you'll have that much less debt to tackle once you've finished your degree.

#8. Brush Up on Tax Basics

If you're working and your parents aren't supporting you, you'll be responsible for filing your own taxes. Tax filing usually isn't too complicated for most young adults, but you'll want to make sure you're scoring key tax breaks — like the saver's credit — if you're contributing to an IRA, or the American Opportunity Credit if you're paying any of your own tuition costs out of pocket.

Learning a bit about taxes will help you see opportunities to earn credits and make you familiar of ways your taxes will change as you age and obtain a home, start a family and enter new income brackets.

#9. Have a Plan

The financial habits you develop at this age can set the tone for how you manage your money in your 30s and beyond. Setting goals — whether it's for paying down your student loan debt, building up a down payment for your first home or saving for retirement — gives you a clear roadmap for getting where you want to go.

Look at your debt, income and long-term goals to help create a savings plan that can make them a reality.

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Click through to see easy ways to put money in your pocket this year:

Easy ways to put more money in your pocket
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9 things 20-somethings need to do to secure their finances

Automate your finances. 

Set up your finances so that money is taken straight from your paycheck and deposited directly into your savings account or a retirement savings account. You can also set up your fixed bills like your Internet and cable to be automatically deducted from your checking account. Automate your finances to save time and prevent overspending. If you see extra money in your account, chances are you’ll find a way to spend it, leaving you little to invest in your future. Automation helps keep your priorities in line so that as money comes in, it is dispersed to your other accounts immediately.

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Cut back. 

At least twice a year, look at your expenses line by line and see if you’re getting the most bang for your buck. For example, do you read the magazines you subscribe to or maximize that gym membership? If the answer is “no,” consider canceling or negotiating a better rate. Take that money you save, and apply it toward bigger payoffs like debt reduction, retirement or an emergency fund.   

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Get rewards. 

Lots of people use debit cards to make it easy to buy and budget for groceries, gas and other routine purchases. Instead of doing that, look into a credit card with a great rewards program for those daily purchases, and set it up to automatically pay the statement balance from your checking account each month. Over the course of the year, you could potentially pocket a few extra hundred dollars just by using a card with a good rewards program instead of your ordinary debit card (just make sure you’re paying off your credit card every month, so you don’t pay extra in interest).

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Boost your income. 

If you love your job and want to grow your career, it's time to think about boosting your income as well. Make it a goal to negotiate a raise this year. Consider your strengths and look at the value you've provided to your company over the last six months to a year, and discuss it during a performance review. This can feel intimidating, but it never hurts to ask.

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Get a side gig. 

Take advantage of your skills, or turn a hobby into profit. Doing so can help you generate extra income – which you can put toward reaching your financial goals. Etsy, for example, is a great place to sell one-of-a-kind products.  If you have Web design, copy editing or other creative skills, consider offering your services on freelance websites such as Fiverr or Elance. These types of side gigs will allow you to earn extra income while also growing your skills.

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Track your progress. 

You can’t save money if you don't know where your money is going. Every month, track your net worth using a personal finance tool or app that will show you exactly where your money is going. This will make you think about your entire financial picture from income and expenses to investments and taxes. With this focus, you can ultimately make the greatest impact on your finances in 2015.

(Photo: Getty)


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