Find out the top financial tips you need to know in your 20s including how to secure a low-term life insurance quote
For any young adult, learning about financial responsibility can be daunting. With so much to juggle including student loans, renting an apartment, securing health insurance, and more, it can feel like getting your finances under control is nearly impossible.
Luckily, we’re here to help! We’ve compiled a few of the most important financial considerations people in their 20s should make to set them up for future success. If you aren’t sure how to start managing your finances, keep reading! We’re going over important subjects like budgeting, building credit, and deciding whether or not to get life insurance! Are you ready to get started? Let’s go!
1. Start Budgeting
No matter where you are professionally, it is never a bad idea to come up with a realistic, actionable budget
The sooner you start budgeting, the better you will be prepared for whatever the future may hold.
Whether you have just secured your dream job or are putting in hours to build up your savings account, it is important to make sure you are planning for your future. When you’re in your 20s, the future seems like an overwhelming prospect. However, the key to budgeting is to establish a financial plan so the future doesn’t seem quite so overwhelming.
To get started budgeting, we recommend listing out your daily expenses first. These can include gas, public transportation, groceries, and other food costs. Once those are listed, you can move on to your recurring expenses like rent, electricity, and any credit card or student loan debt payments you make. Once you have all of your expenses laid out, you can begin to structure a financial plan. For most people, this will involve identifying places to cut costs so you can begin to build your savings. You might find that you are spending too much money on certain aspects of your life and you can make adjustments accordingly.
After you have all of your incidental and recurring expenses listed out, the next step is to set savings goals for the future. Are you saving up for a big move? Are you considering getting married or having children in the next few years? Are you trying to pay off your vehicle? These are all great goals to set to avoid financial trouble in the future. Using the two lists you’ve created—your expenses and your savings goals—you can calculate how long you will have to save to reach your goals.
2. Make a Plan to Get Insured
Plan how you want to secure car insurance, health insurance, and term life insurance quote while you are in your 20s
The best time to get term life insurance is when you are young.
One of the most mystifying financial steps for young people is getting insured. People in their 20s should begin thinking about how to get car insurance, health insurance—and later on—a term life insurance quote.
Car insurance is essential to avoid exorbitant repair costs in the event of an accident. As long as you have a record of safe driving, it should be relatively easy to get car insurance. However, car insurance for young people is often more expensive as young people are deemed high-risk investments by the insurance companies. While this isn’t necessarily fair to conservative young drivers, it’s just how insurance companies operate.
The next important insurance type to explore is health insurance. Most people will be able to get health insurance through their job, but not every career path is exactly the same. Many young people are staying on their parent’s health insurance for as long as possible, which is until the age of 26. After 26, if you do not receive insurance through your job—which could be for several reasons—you will need to get insured via the Patient Protection and Affordable Care Act.
The last type of insurance we’ll be covering is term life insurance. Term life insurance is the preferred type of life insurance for people in their 20s. We recommend searching for term life insurance quotes as soon as possible if you have outstanding debts or have someone that depends on your income. Outstanding debts could include student loans or car payments. The reason young people need life insurance for debt is in the event of the unthinkable, your debts become the responsibility of your loved ones. To avoid burdening your loved ones with your debt, we recommend getting term life insurance.
It is also important to note that life insurance is cheaper the younger you are. So, if you are trying to get the best term life insurance quote possible, you should start searching right away.
3. Begin Saving For Retirement
While retirement is a long way off, you want to make sure that you are saving as much money as possible while you’re young
It is never too early to start saving for retirement.
It may seem like jumping the gun to be talking about retirement already, but the truth is that a lot of young people are saving for retirement as long as they are working. There is a real benefit to this too beyond being financially cautious. The longer your money sits in a retirement account, the more interest it will accumulate and the more you can secure for your future self. There are two ways to start saving money through your employer—either in a 401K or a Roth IRA. While we don’t have time to fully explore how each of these options work, keep in mind that you should be establishing one of these options while you are in your 20s. While it may be initially unnerving to see even more taken out of your paycheck, remember that you will see that money—and more—in the future.
4. Start Building Your Credit History
You will need to take on some financial risk to create and maintain good credit
Establishing good credit is important for anyone in their 20s.
As a young adult, there are a lot of situations that require you to undergo a credit check. If you intend to rent an apartment without a cosigner—for example—you will need to have some form of credit. The easiest way to start building credit is by getting a credit card. We have all heard horror stories about credit card debt, but the truth is that everyone needs a credit card to get a credit score.
The best way to build good credit as a young person is by charging purchases to your credit card and paying them off on time. This may sound like an overly simple concept, but it can be difficult for some to budget well enough to pay off a credit card each month. If you’ve already made a budget for yourself, you should have no problem automating your monthly credit card payment.
Once you have taken these steps to secure your future, you are taking the first steps toward financial success. With the world becoming increasingly uncertain, it is comforting for a lot of twenty-somethings to have a financial plan in place. While this is far from a complete list of financial tips, we hope that our tips will help you feel more confident in your finances as you progress through adulthood.
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