Financial Guide: Young Adult Edition (Part 1)

    3 minutes
    Advice to help those new to navigating their financial health on their own

    Transitioning into adulthood includes taking control of your finances and your future. While some of us may not be young adults anymore, we all have young adults in our lives experiencing this big change and it can be difficult to know where to get started. Here are tips for young adults getting started on their financial journey.

    Start with a spending plan. Knowing where your money is coming and going is the first step. You can use our free spending plan to get started. Focus on the big areas first: food, utilities and rent. Add in other expenses that you consider necessary like a cell phone or even Netflix if that’s how you de-stress. Don’t forget to pay into your savings if you can. Any amount you can save each month is a good amount.

    Build an emergency saving. This is your safety net in case you have an unexpected or expensive issue like a sudden job loss or necessary car repairs. Ideally, you want to save three to six months’ worth of your monthly expenses. For example, if all your monthly bills and necessary expenditures like gas and food cost you $3,000 a month, you will want your emergency fund to be at least $9,000. It will take time to achieve this goal and you may not always be able to save each month, but don’t get discouraged. We all have setbacks that can lengthen our timelines to achieving savings goals.

    Your credit score is important. A good credit score can help you qualify for low rates on credit cards, car loans and home mortgages. It will determine if you get approved for an apartment and help you obtain smaller purchases like a cellphone plan or financing for furniture or electronics. Your score is weighted based on five different categories: payment history, accounts owed, new credit, length of credit history and credit mix (or different types of accounts). You can check your score for free anytime on the Credit Human mobile app if you are a member or you can chat with Coach Lea. Coach Lea can give you your credit score and a personalized plan to strengthen your credit.

    Start planning for the future. It’s never too early to start planning for retirement. In fact, the earlier the better. A 401K is a great option for young people to start investing. A 401k is a retirement and investing plan that is offered by some employers. You want to aim to invest a total of 10% to 15% of your income each year for retirement — your employer match counts toward that goal. An employer match means that if you input 3% of each paycheck into your 401K, your employer will “match it” or will also put 3% into your 401K for a total of 6% each pay period. This is not offered by every employer, but it’s a great option to take advantage of if it is. You can estimate what your retirement amount will be by utilizing our 401K calculator.

    Navigating your finances as a young adult doesn’t have to be stressful and it’s never too early to start planning for your future. Schedule a free appointment at one of our Financial Health Center to get started on your successful financial health journey.