If you are in your 20s, chances are financial planning is the last thing you want to think about. Maybe you're in college or just starting your first real job and have only enough to pay your monthly bills. Whatever the case may be, you are at an age where making wise decisions now can have a significant impact on your financial future. Here are three important financial decisions to make in your 20s:
Start Planning for Retirement
It's a no-brainer that the younger you are when you start saving for retirement, the more money you will have by the time you quit working. If this is the case, then why don't more young people do it? For some people, they feel they don't have any extra money to put away. For others, retirement seems like light years away, something to worry about later in life.
However, financial experts that offer retirement planning services are adamant about planning for retirement as soon as you start working. For someone who puts away $150,000 a year, starting at the age of 25 and ending at the age of 40, their retirement fund has the potential to grow to over one million dollars.
Don't Spend a Lot on Your Wedding
Going by the average age in the United States, you will be around 28 years old on your wedding day. You think it's going to be the best day of your life (and maybe it will be) but it's wise not to spend a fortune on your wedding. The average cost of a wedding in the United States is $26,720.
If you think you can get by with spending less, there are many benefits for doing so, as having some extra money after you get married will allow you to:
- Make a down payment on your first home
- Buy a good used vehicle
- Invest in the stock market
- Make a tax-deductible charitable contribution
Spending less on your wedding ceremony will also provide more in your budget for that all-important honeymoon.
Open Up a Savings Account
One type of account you shouldn't go without is a savings account. Having one will allow you to cover your expenses in the event of an emergency. The minimum amount you should have in your savings account is $2,000. This amount of money can help immensely when you are needing to resolve a financial crisis, such as losing your job. Even better than that, however, is to have enough money to cover 6 to 12 months of expenses.
