As young Twenty Somethings we may have other personal priorities that we don’t feel involve our Personal Finances.  We may prioritize graduating from school, finding a job, moving out of our parents house or starting a family over building our credit score, saving money, or planning for our retirement. However, the fact of the matter is that everything, and I mean every aspect of our life, involves personal finance. No matter how long we close our eyes we can’t help but face the fact that personal finance is always right in front of us.

Credit Matters

I suggest that we get a credit card with a low limit such as $500 as soon as we are eligible. Many financial institutions offer credit cards to students as young as 18 years old.  Having a credit card with a low limit allows us to get used to the idea of revolving credit.  In case we do make the mistake of spending more on our credit card than we can afford, at least the low limit of $500 will allow us to make the minimum monthly payment.  Every month that we use our credit card and make at least the minimum monthly payment helps us build a good credit score.

A good credit score is important because it will determine our entire financial future.  Almost everyone checks our credit score from our potential landlord to our potential employer.  If your short term goal is to find a job or move out of your parent’s house then having a good credit score could mean the difference between being accepted or being declined.

I also suggest that parents give their teenagers an additional credit card on their account to teach young people the value of money along with financial responsibility.  An additional credit card user has access to the credit card without the responsibility for the debt.  Although an additional credit card will not help build a good credit score for the authorized user, it will create good spending habits.

Money Matters

Graduating from school is definitely a milestone in our life but what comes after that is the difficult task. When we graduate from college we grow up from adolescent students into young adults and hopefully professionals.  Receiving our first pay check can be very exciting and overwhelming at the same time.  If we don’t learn how to manage our money properly at a young age it could be hard to break bad financial habits when we are older.

I wish that my parents would have sat me down to talk about money management when I was 18 or 19 years old.  Let me tell you if I managed to save my money instead of spending it and accumulating debt in my 20’s I would have a lot more money now in my 30’s.  I don’t regret my financial irresponsibility because I definitely learned from my mistakes; I just wish that I didn’t have to learn the hard way.

Retirement Matters

I personally do not want to work forever; my planned retirement age is 60.  I may retire early but I don’t think so, I’m not planning for it anyways.  I have a lot of financial goals before retirement and this is why I don’t invest all of my savings into my retirement savings plan .  Of the 20% that I save per pay check 5% is allocated to cash in case of a short term emergency, 10% is invested for various medium term goals such as buying a house and taking a bi annual trip to Europe, and another 5% is invested into my retirement savings account.  I have a longer investment period for my retirement; therefore I can afford to invest a little bit less since I will be investing constantly over the next 30 years.

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