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Most financial advisors will tell you that the earlier you start saving and putting together a good financial plan, the better off you’ll be. There is no “one plan fits all” available. So finding a strategy that works for you may consist of a bit of trial and error. Here are some guidelines for those in their early twenties to take into consideration as you plan your strategy.
Watch your spending. In your 20’s you are probably just getting started in a new career. You probably are not receiving frequent or large pay raises, but, by cutting expenses, you may achieve the same effect. It’s a good idea to do your research and shop around before you buy. Prices may vary widely for similar or identical products. The money you save from shopping around may be the equivalent of having a good paying second job.
Pay yourself first. No matter how much you are able to set aside in a saving or investment account, it all will add up over time. So every time you get paid pay yourself. A good rule to follow if you can is to save 10% of you income. It will pay off greatly later.
Be careful when using credit cards. It’s easy to lose control of credit card charges. This can be an expensive for of debt if not paid in full at the end of each billing period. Try to pay the entire balance in full even if it’s a stretch. If you have to carry a balance, try not to make any more purchases until the credit balance is zero.
Do you have adequate medical coverage? At this age you may not even visit your doctor even once a year. Although, you never know when you have an emergency and need medical attention. A serious illness can be very expensive and even to the point of bankruptcy. It’s a good idea to have a good major medical policy so you don’t have to worry about financial ruin.
A credit record. Having a good credit report can affect you in ways you would never think about. Not only will it affect your buying a home, car, or starting a business, it will also affect the interest rates you pay on a loan, your home or auto premiums, or whether you get to rent that apartment you really want. It’s important to keep your financial obligations current and never make a financial commitment you can keep. However, if you do find yourself falling behind on an obligation, talk to your creditors immediately to make an alternative arrangements so that you won’t affect your credit rating in a negative way.
Do you need assistance with a financial strategy that fits your situation? Contact our office at (260) 497-9761 to schedule an appointment with our advisors.
