Financial Planning in Your 20s - Adviser Investments

Financial Planning in Your 20s

August 20, 2021

Is youth really wasted on the young? Not necessarily.

Our 20s are a time of opportunity—advancing our education, starting a career, carving out a place in the world and perhaps finding someone to share it with. Far from wasted, our youth is when many of us establish the financial routines that form a foundation for the rest of our lives.

Here are five best practices to follow yourself, or pass along to your children, grandchildren or other young people you care about to set them on a course for financial success now and in the future:

  1. Invest early and often. When you start earning a paycheck, strive to put away at least 10% of your pre-tax income for retirement. This sounds like a lot, but keep in mind that this 10% includes any matching funds you receive from your employer through a 401(k) plan, for example. Tap into the power of compounding by investing at an early age and allowing the market to work for you.
  2. Invest for the long haul. You can weather greater risk when you are young; there’s more time to recover from—and capitalize on—inevitable market downturns. You won’t be touching your retirement accounts for decades, so make stocks or stock funds a major component of your portfolio.
  3. Create an emergency fund. Can you afford to continue paying your monthly bills if you lose your job unexpectedly? The rule of thumb is to set aside six months of household living expenses to cover you in a crisis. (Our Budget Worksheet can help you plan ahead.)
  4. Establish your credit. Your credit score reflects your financial health and has an impact on how much you’ll pay for big expenses down the road: Interest rates on home and car loans and insurance premiums are often based, in part, on your credit history. Potential employers may also check your credit history to get a read on your financial stability. Review your credit score and credit reports on a regular basis. We recommend adding at least one credit-monitoring app to your phone—Credit Karma, Mint and Credit Sesame all monitor your credit score and provide tips on improving it.
  5. Maximize company benefits. Your employer may match your 401(k) contributions or offer other benefits. Take advantage of these perks, including health savings accounts, life and disability insurance and other savings like discounts on gym memberships or continuing education. Check with your company’s human resources department to make sure you are aware of all benefits available to you.

If you have questions about these tips for twentysomethings or any other financial planning or investment topics, please contact your wealth management team. As The Planner You Can Talk To, we are always happy to help.


This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

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