Disclaimer: The following is a sponsored post by Lexington Law. All opinions are 100% my own.
Your 20’s are usually the beginning of going out into the real world and growing up.
A huge part of becoming an adult is learning how to take care of yourself financially and understanding how finances work.
Unfortunately, many 20 somethings leave the school system knowing very little about money or what to do with it.
Today, you’re going to learn some fundamental financial goals you should make in your 20’s and why they’re so important.
1. Create a budget that works
A manageable budget can do wonders for people.
Without a budget, people spend without giving each dollar they make a job, which can lead to people overspending.
I recommend checking out YNAB (You Need A Budget) to easily create a solid budget that will get you paying off your debt.
They even have a free year trial for students currently enrolled in college.
You can even create and customize budget spending categories.
2. Understand your credit score
A credit score is a number that represents the creditworthiness and likeliness you’ll pay off a loan.
Your credit score may be used in many occurrences, such as:
- Potential lenders
- Prospective Employee
- and more!
Having a low credit score could potentially reject you from a job, house, lender, and more.
If you believe you may have incorrect or unverifiable items on your credit score, Lexington Law can help you remove these off your credit report.
Lexington Law has helped hundreds of thousands of clients remove inaccurate and unverifiable items from credit reports such as late payments, collections, charge-offs, and more.
If you need assistance with filing disputes or challenging specific items on your credit report, learn more about Lexington Law here and start getting the help you need today.
3. Save at least 3x of your monthly living expenses
Saving up for an emergency fund worth at least 3x your monthly living expenses ensures that you’ll be ready for the unpredictable to happen.
Once you live on your own, this will become incredibly important since you are taking care of yourself.
The cushion of an emergency fund will give you peace of mind in case your car breaks down or your pet gets sick.
4. Pay off debt
Do you have credit card or student loan debt? If so, create a plan to effectively pay off your debt in a manageable way.
You don’t need to be overly aggressive with paying off (unless you want to be, this can work for a lot of people).
However, in my case, doing this can backfire and lead to a spending binge, just like when someone gives up their favorite junk food for a long period, they finally eat it and binge out.
Dave Ramsey’s Snowball Method is very popular.
You focus on paying off accounts with the smallest balances first while paying the minimum payment on larger debts.
5. Learn how to develop a healthy relationship with money
Many people are afraid of money and are not sure how to handle it, which is understandable since very little is taught in high school regarding personal finance.
Even worse, family members and friends may have a poor relationship with money, causing you to do the same.
Luckily, we live in a time where tons of information is easily accessible on the internet.
No one ever taught me about money, but I readily use Google and Pinterest to find articles on different finance subjects.
You do have the power to take back your financial life and do not need to fear money.
6. Understand how student loans work
The sooner you understand how student loans work, the better. Unfortunately, very little is done in high school to get you prepared for how financial aid and student loans work.
Michelle from Making Sense of Cents paid off her loans at a young age and explains how student loans work here.
If you need help understanding how you can pay off your student loans as fast as possible, click here.
Creating financial goals helps you on the path to financial freedom.
By creating a goal, you’re more likely to stick to a plan and save money. Do you have a financial goal? What is your current financial goal?
In a nutshell:
1. Create a budget that works.
2. Understand your credit score.
3. Save at least 3x your monthly expenses.
4. Pay off debt.
5. Learn how to develop a healthy relationship with money.
6. Understand how student loans work.
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