5 Finacial Planning Tips for Young Adults

5 Financial Planning Tips for Young Adults

Youth may often be wasted on the young, but it doesn’t have to be. Your twenties are a time of great opportunity—starting a career, advancing your education, living in a place of your own, perhaps meeting a life partner. This is a critical time to create good investing and financial planning habits upon which to build a strong foundation for the rest of your life.

While not all-inclusive, here are five habits that can help set you (or the 20-something child or grandchild in your life) on a course for financial success now and in the future:

  1. Invest Early and Often. When you start earning a paycheck, put away at least 10% of your pre-tax income toward retirement. This sounds like a lot, but keep in mind that this 10% also includes any matching funds you receive from your employer through, say, a 401(k) plan. Tap into the power of compounding by investing early and often and allowing the market to work for you.
  2. Invest for the Long Haul. You can justify riskier investments with youth on your side; 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 general rule of thumb is to keep six months of household living expenses at the ready.
  4. Build Your Credit. Your credit score reflects your financial health. Creditworthiness has a big 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 for 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 each monitor your credit score and provide tips on improving it.
  5. Maximize Company Benefits. Making the most of retirement benefits provided by your employer (especially any matching funds) should be your first priority. But many companies offer matching funds or discounts on  other items, including health savings accounts, life and disability insurance, and other perks like discounts on gym memberships or continuing education. Check with your company’s human resources department to make sure you’re fully aware of all benefits available to you.

We’re always happy to help if you have questions about these tips for twentysomethings or any other investment topics. Simply contact us at (800) 492-6868 if you would like more financial planning guidance.

About Adviser Investments

Adviser is a full-service wealth management firm, offering investment managementfinancial and tax planningmanaged individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868.

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