Just Good Advice: Financial Tips for Young Adults

I have three kids in their early to mid-twenties, and like many young adults in their first jobs, they are all just getting by financially. Each of their paychecks barely covers their expenses, and they are trying hard to pay off their credit cards each month. Here are some tips that I think helped them:

• Take free money: Contribute to a 401(k) account if your employer offers it at least up to the amount your employer matches. These funds will accumulate over time into something sizable in the future.
• Have ONE credit card: And pay off the interest and as much of the principal as possible each month so it doesn’t compound your debt into the stratosphere. Even better: stop charging!
• Create financial goals: Write down your goals and build a budget. Whether you hope to be a stay-at-home parent, start a new business, or make a career change, know the cost implications and plan.
• Pay yourself first: Our human nature is to procrastinate, so starting to save early, on some level, is a key to having money later. First, build a savings account to tap into during a tough period or fix something that breaks. Later, you’ll use the funds for longer-term goals, like funding that first condo or home purchase.
• Pay off debt with the highest interest rate first: If you have credit card debt and student loans, pay off your highest interest rate debt first—then start on the next highest.

If as a young adult, you can save even $30 per week, by the end of the year, you’ll have just over $1,500 saved up. And if you invest that money and keep adding to it, over time, you’ll accumulate a nice amount of savings.

Key learning: One of the greatest powers is compound interest. Starting to save when you’re young can set you on the path toward financial stability.