Essential Moves for Twenty-Year-Olds

There are many things that we know we should do. We should walk or bike to work, we should eat our vegetables, and we should keep all our receipts. Yet, there are some financial moves that everyone in his/her early twenties needs to make. While it seems like there is an endless stream of years ahead of us, time moves quickly and no one wants to learn the lesson too late. Becoming that secure and satisfied middle aged adult hinges upon what you do now.

Set Up A Retirement Fund

If you haven't already set up a retirement account for yourself, then run to a financial adviser. Anyone over the age of twenty who hasn't started a retirement fund is quickly falling behind in the future of finances. Even if the job isn't the one you plan to keep, it doesn't hurt to start saving; retirement funds are transferable.

If you work for non-profit organizations you'll be required to open a 403b account. This account travels with you when you move from one job to another, so even those who don't work in the non-profit field can open a 403b for transferable ease.

Most for profit companies offer a 401k plan to their employees. The benefit of the 401k is that many employers match the employee contribution, upping the value of your retirement fund. If you transfer jobs the value of your 401k will be sent to you to deposit into your new 401k plan or into a 403b plan that would supplement your 401k retirement.

You're juggling college loans, rent, and other bills; retirement isn't your priority. However, it is crucial. If you put $100 into a retirement fund at the age of 50 and it's worth $200 when you retire, the same $100 put into a retirement fund at the age of 20 would be worth $1400 at retirement. It's not necessarily the amount of money you put into the account but the time that it accrues since it earns compound interest.

Put Money Into Savings

Now that you're paying your bills plus you have a retirement fund to worry about, the last thing you'll want to hear is that you need to put more money aside. However, not only do you need to hear it, but you need to do it as well. It's important to have a savings to help in emergencies. A good rule of thumb is to put 10% of your salary into a savings account.

This means spending less and doing without things that you want. Remember, to become the thirty or forty-year-old who has a new car and takes family vacations, you must first put in your years as a twenty-year-old who lives without an iPhone or designer clothes. If you earn $400 a week, put $40 into a savings account and forget about it.

Don't Accrue Debt

There are bills you need to pay and debts that are excusable. Student loans need to be paid, and a used car loan is acceptable. A mortgage payment is a heavy weight, but it pays off in the end. However, credit card debt or new car loans are inexcusable for someone in his/her early twenties. Building debt now leads towards years of payments and a weak financial future. It's tempting, and you'll see older, established spenders using their credit cards, but you can't fall into the trap.

Charge only what you can pay off each month, and if one month's bill carries over into the next month lock the credit card away. Thinking that you'll pay it back later when you get a raise or when you pay off your student loans is trouble. Pay it now and use your future earnings in the future.