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On Your Own, Enjoying Your 20s

On Your Own, Enjoying Your 20s

Congratulations! You made it through college, got that degree, found your first job and you are off and running!

But wait; there are some things that are affecting you, that were not discussed at the University.

  • What is this thing about a credit history?
  • Do I really need a will?
  • Should I worry about retirement, it is so far away!
  • Should I buy a home?
  • How do I start investing?

Time to educate yourself about securing and enhancing your financial position.  This education is an ongoing life-long process.  Yes, I am preaching a little bit, but really, who else in the whole wide world cares more about your financial future than you?  So, utilize some of those college academic skills and start learning about the wonderful world of personal finances.  If you don’t do it for yourself, no one else will do it for you!

Things to think about for twenty-somethings:

  • Establish an emergency cash reserve of three to six months of living expenses in a liquid cash account.
  • Establish a monthly spending plan and most importantly TRACK IT and make adjustments in your personal financial habits.  Lots of tools are available for this:, Quicken, to name a few.
  • Write down and begin saving for your financial goals: home, retirement, children’s education.
  • Establish your credit history.  Most likely you will borrow money in the future and will need a good credit report and high credit score to be offered consumer friendly loan terms.
  • Contribute to your employer’s plan at least in the amount necessary to maximize any matching contribution from your employer.

Back to our original questions (with some commentary):

What is this thing about a credit history?

A clean credit report and accompanying high credit score will help you: borrow for a home or car; may reduce your insurance premiums and could help your land another professional position.

Do I really need a will?

Well, probably.  And it can be written very inexpensively.  Unfortunately, young people do pass on prematurely.  A will is the plan of the decedent for their survivors.  Having the will written by a competent estate planning attorney will relieve survivors of making other stressful decisions.

Should I worry about retirement, it is so far away!

Yes, again, if I had a dollar for every older person who told me, they wished they had started saving for retirement at an earlier age, I would be retired!  Save smaller amounts over longer time periods, let time be your ally in funding your retirement. This approach is much easier than trying to save large amounts in the last 10 years of your career.

Should I buy a home?

Maybe, the key item in many real estate questions is time. How long will you be in the property?  Longer time periods favor ownership over rental.

How do I start investing?

Establish your emergency cash reserve of 3 to 6 months of expenses in a liquid cash account. Have adequate insurance policies in place for your: home, life, health, auto, disability. Then, use your employer’s retirement plan. Next, set up an investment account at your bank, credit union, Ameritrade, Scottrade, brokerage house.  Costs vary with trading activity, so estimate your trading frequency as your evaluate potential brokerage houses.

So, yes there are many financial planning issues to consider as you launch your professional career.  It can seem daunting, but think about the effort you exerted in achieving your degree.  You have the talent and the intellectual capacity to become better informed on these issues.  I strongly encourage you to seize control of your financial future.  Start by reading a personal finance magazine every month.  Feel free to contact my office for a complementary, no-obligation meeting.