Money Advice for Millennials: Taking Charge of Your Finances in Your 20s
Understanding the right money advice for millennials will help give you an edge as you take charge of your finances at an early age. For example, setting up a day-to-day financial management system can guide you in making money decisions and making sure you don't lose out on beneficial savings. For example, signing up for your employer's retirement account at an early age will allow you to compound your earnings for your dream retirement.
Follow this and other tips to set yourself up for future financial success.
Set up a Money Management Tool
One of the best things you can do for yourself is organizing your finances. With the help of the right tools, this can be a relatively quick and easy task. Consider KeyBank's tool HelloWallet, which allows you to manage your budget, get your Financial Wellness Score, and even see how your peers (people around the same age and income as you) are doing in comparison. Be sure to add financial trackers to track the goals that are important to you.
Likewise, tools such as Zelle allow you to send money to friends and family with a few quick buttons and acts as a faster, easier, and more reliable way to send funds. Online and mobile banking may be another money management option so that you can see how much you're spending and saving while on the go. Consider your options carefully and pick one or more money management tools that best fits your needs.
Sign up for Your Employer's Retirement Plan
Join your employer's 401(k) retirement account. At first, it may seem difficult for your paycheck to cover your monthly bills on top of your student loans and credit card payments, but contributing to a retirement plan now will help you out in the long run. Use some of the advice below to open up cash flow in your budget, and sign up for your employer's retirement plan.
Don't Lapse on Your Healthcare Insurance
Now that you're no longer on your parent's healthcare plan, you're fully in charge of making sure you don't lapse. Lapsing health insurance coverage — meaning skipping coverage, even for a week or two — can have dire financial consequences for decades to come if you end up with an emergency situation.
Either sign up for your employer's plan, your spouse's plan, use the healthcare exchange, or purchase a temporary health insurance plan until you can make other arrangements.
Continue to Live Like You're in College
One of the best ways to get a sound financial footing in your 20s is to earn a full-time check while living like you're still a student. For instance, try living with a roommate to cut rent costs in half. Opt for public transportation instead of owning and insuring a vehicle. Learning to cook meals from scratch can also add a lot of money back into your cash flow that would otherwise be spent going out to eat
Take all of that extra money you don't spend and either use it to pay down debt, establish your emergency fund, or invest in your retirement.
Pay Attention to Interest Rates
Your money has years to earn interest, so shop around for the highest savings account interest rates about once a year. Finding an account with even a 1 percent higher interest rate than the one you're currently in means an extra $1,104 on a $10,000 balance over the next decade.
When you're in your 20s, time is on your side. Take action on this money advice for millennials to set yourself up for financial success in your 30s, 40s, and beyond.