Whether you’re in college, leaving college, or just trying to figure out what you want to do with your life, it can be tough being in your 20s. Financially, you’re just starting out and it’s easy for debt to pile on. While becoming financially literate overnight may be impossible, by starting slow and continuing to learn over time, you can make your 20s a time of growth—financially and personally.
Although occasionally it happens, the average student doesn’t leave college and start making a six-figure salary. So, before student loans, rent, credit card debt, and living expenses in general weigh you down, here’s how you can start to become more financially responsible.
The first step? Get a job. Finding a job in your chosen career, or just during the interim to pay the bills, is the first step toward creating a financially viable future. Chances are, you’re not going to land your dream job right out of the gate. That will take time. In the meantime, laying out your goals for the future can help you stay on track.
Make sure you know how much you make each month. Of course, you know your salary. But do you know how much you bring in after taxes? That’s an important step toward managing your money. Along with this, it’s a good idea to check in on your credit score annually so you’re aware of where you stand.
Create a budget. This may seem like a hassle, but in the long run it will be a lot less trouble than paying off debt later. And now that you know your take-home pay, you can begin calculating where your dollars go and how much you’re spending versus making. A daily morning cup of coffee from Starbucks might seem like nothing much, but over time it can add up. By making coffee at home, you can save a lot of money.
There are different budgeting methods, too. If you follow the 80/20 budget, for example, you’d put 20% of your income into your savings account and spend the rest on your expenses—the rule of thumb is 50% for necessities and 30% for your personal use. There are also free budget apps that can help you track your spending.
Save your money. One of the best ways to plan for your future is through savings. Setting money aside each month that goes into a savings account to be used for emergencies can provide stability. You should also set aside money for retirement, even if it seems like it’s a long way off. Many jobs will offer 401(k)s. If they don’t, there are alternative retirement options to pursue. But the earlier you start saving, the more you’ll have to fall back on during retirement.
Build your credit. A great way to build credit if you’re looking to find an apartment, get an auto loan, or buy a house, is to use a credit card. But these can get out of control fast. Always pay off your balance each month, so you don’t spend more than you can afford and wind up in more debt.
There’s plenty of literature out there that can help you learn more about mastering your finances. Debt can be sneaky, however, and if you find yourself struggling, seeking credit counseling is a great way to create a budget and learn more about your options. A counselor can recommend workshops that will provide more financial information, or they may advise you to enroll in a debt management program, which can get you on your feet if you’re in over your head.
The bottom line is that setting goals for yourself is a great way to begin navigating your 20s. By tracking your spending, you can successfully reach those goals as you establish yourself and navigate big moves, relationships, and new jobs.