THE LIFE

June 8th, 2010

Finance Tips to Consider by 25

Coin Jar

As young professionals, we are often occupied by working 40-50 hours per week  and maintaining an active social life that we often forget our finances can be the single thing that dictates how we live. 

In your early twenties you can make the biggest impact on your post career financial season than ever before.

Here are three things to help you along the way:

Coin JarContribute to 401k – Most companies offer retirement saving plans, also known as 401k’s for there employees to set aside tax free money for retirement. Companies have begun to match employee contributions to encourage savings and post career planning. I know that at 25, the last thing you want to think about is retirement but with the fragility of social security and rising medical cost, it’s not too early to start thinking about it. Also look into a Roth IRA.

Get a handle on your loans – At 25 it has been at least four years or so after college and many young professional are still paying Sallie Mae, mortgages or car loans. Your twenties are the best time to focus on loan management. Developing a plan to pay off loans and sticking to it will increase your credit score, reduce financial strain during unexpected events, eliminates the need to file for bankruptcy and prevents the passing of debt to your children.

Create an entertainment fund - You may say how can I have an entertainment fund with loans and contributing to a retirement plan? Easy, set a weekly amount usually $50 – $75, and use that for all your entertainment expenses. That includes food, movies, nightlife  and spirits. You never want to be so consumed with loans and savings that your forget to enjoy life.  The good thing is, any money you don’t use can be rolled over into the next week.

This is a very conservative approach but effective if used faithfully. There are plenty tips we could all use, but it’s always good to start somewhere.

 


About the Author

Corey Phillips
Born and raised in Queens, NY, Corey is a working finance professional in Indianapolis, IN. A graduate of the University of South Carolina, Corey obtained a dual degree in Finance and Management. In addition to his corporate career, Corey possesses a passion for helping others realize their potential and authority.




 
 

 
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14 Comments


  1. SuzNo Gravatar

    I love this article. I am a 26 and just decided to start saving for retirement. It is very difficult to do with 60K in student loans to pay, I often feel like there is no time for life. I am going to try the entertainment fund as part of my budgeting I think that will help alot with stress..

    Keep them coming

    Suz


  2. Nice article and great insight! I feel like many of us young professionals know these simple tips, but we fail to use them.


  3. What other tips would you give if my job does not offer 401K.. are there other simple methods other than investing in stocks.


  4. Hello Timothy,

    Several other tips include Roth IRA's and mutual funds. The idea of retirement savings plans is to find an investment vehicle to sustain at least 80% of your daily lifestyle after retirement. Conventional saving accounts do not offer enough financial return to sustain in the future.

    Without knowing your present situation, you may want to speak with a financial advisor to see which options best suit your current and future needs.


  5. I am 20 year old junior, should I began thinking about retirement saving?


  6. Hello JJ,

    As a junior in College retirement savings is not a necessity. However if your income allows you to put toward an IRA or mutual fund, that will be the best way to go. As a college student you should focus on minimizing loans and looking for ways to avoid debt. Try to exit college with as little debt as possible; it will only help in the long run.


  7. Hello JJ,

    As a junior in College retirement savings is not a necessity. However if your income allows you to put toward an IRA or mutual fund, that will be the best way to go. As a college student you should focus on minimizing loans and looking for ways to avoid debt. Try to exit college with as little debt as possible; it will only help in the long run.


  8. This is so true as well as so hard. Even though I graduated college 5 years ago my finances were completely thrown off when I went to graduate school. Now as I transition back into the professional world (job hunting as we speak) I am a little behind. I am nowhere near where I planned to be at the age of 27. I honestly wished I was wise enough to save during high school and those sporatic refund checks I recieved in college.


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