3 Financial Tips for 20-Somethings

How do you feel when you think about your finances?

A. Scared
B. Upset
C. Guilty
D. Proud
E. Confident

If your answer was A, B, or C – or any combination thereof – it’s time to get realistic about your cash flow. Yes, you’re only in your twenties, but that’s also why it’s crucial to start now. Some people in their twenties were lucky enough to know about financial aid, but other are loaded with student loan debt.

Money habits you develop in your earlier years will become even more entrenched as you get older. And dollars saved now will accrue decades’ worth of interest before you retire.  Here are our three tips for financial sanity, with apologies to the Twelve Steps of Alcoholics Anonymous

TIP ONE: ADMIT YOU HAVE A PROBLEM

Your bank account is single digits. You’ve got credit card bills every month, and no savings. Step number one: you’ve got to admit that you’ve lost control. What’s that, you say? You can start saving any time you want? You’ll get serious about your finances soon? How many times have you said that before, only to fall off the wagon when REI and Anthropologie hold their post-Christmas sales? It’s important to see the destructive pattern for what it is, and to choose to create a different lifestyle.

TIP TWO: FIND A POWER GREATER THAN YOURSELF

In order to make a change of this magnitude, you’ve got to find a compelling reason. For some people it’s hiring accountant to whom they’re, well, accountable. For others, it’s a goal and a reward system: once I save $3,000, I’ll celebrate by buying a plane ticket to see friends. For still others, it’s a fierce desire to step into their adult independence. Knowing you can rely on yourself to take care of yourself – financially and otherwise – is actually pretty cool. Being responsible seems boring to a kid, but it’s hugely important to an adult.

TIP THREE: MAKE A SEARCHING INVENTORY OF YOUR EXPENDITURES

That’s your budget. Often, people in debt have neglected the basic, but key, step of sitting down and writing it out. Identify your income per month and your expenditures. Figure out how much you have left over. Now, here’s the trick – create an automatic deposit of that amount to a savings account AT THE BEGINNING OF THE MONTH. This process works a lot better than waiting until the end of the month and saving what’s left over.