What you do in your 20s can greatly influence how your finances affect you in your 40s. From investments to making smart decisions with your earnings each month, now is the time to act. Research has shown that those who take their finances seriously early on have a better chance of a comfortable retirement and less debt long before they do retire.
Start a Savings Account
Do you have emergency cash in your savings account? If not, you need to establish an emergency fund. A minimum of $1,000 is best. It’s a good idea to also try to aim for enough savings to cover three months of expenses in case something happens such as an illness, job loss, etc.
Invest in Your Retirement
In your 20s, you may not have any care about your retirement, but it will creep up on you fast. The amount you start putting into your retirement now is important – and could really make a difference. Even if you invest the minimum into your job’s IRA or 401(k), you are making a solid effort. You can always roll that retirement fund into an IRA Roth later on.
Take Care of Credit Card Debt
Now is the time to tackle credit card debt. This is especially important to take care of before settling down with a family. Also, the faster you pay them off now, the less interest you will pay over your lifetime on useless debts.
If you don’t have any credit card debt, do what you can to avoid it.
Pay Off Student Loans
Most 20 year olds have student loans. Some even have multiple loans. Regardless of how long you actually have to pay them off, aim to pay them off 100 percent before you are 30. The amount of interest you will save paying them off early will put you in a prime spot for your 40s.
Unbelievably, there are plenty of 40 year olds still paying off student loans from their 20s. You can beat the statistic by starting early.
File for Bankruptcy Early – If You Need It
If you have already gotten over your head in loans and credit cards, it is better to file bankruptcy in your 20s and get it over with than trying to rebuild your credit in your 40s.
Consult the bankruptcy attorneys at The Law Office of Kelley & Fulton today regarding your financial situation. Our attorneys can assess your student loans, tax obligations and credit cards to find which bankruptcy option works best for you.