Financial Tips for Twenty-Somethings
1/9/2013 1:41:27 PM

Twenty-somethings today are not as financially independent as previous generations. Studies show that many young adults continue to rely on their parents for housing and paying some of their bills. "This could be due to poor decisions right out of high school or college, or it can be something beyond the young person’s control. But, knowing how to properly manage money is a necessary skill toward financial independence,” said John W. Fusilier, CEO with First National Bank DeRidder.

Taking smart steps during the early years of adulthood will lead to greater reward and independence later.
"Many young adults stumble into a pattern when it comes to handling their finances,” said Fusilier. "They may not have been taught how to take care of their money and so they do what they can and figure it out as they go along. That can work for some people, but it can trap others who suddenly find themselves in significant debt and no clue on how to climb out.”

Often, young adults don’t realize that they need to establish credit and a good payment history before they will be approved for major loans, such as cars or homes. "We talk so much about avoiding credit card debt that some young people think it is bad to have a credit card. Having the credit card isn’t the problem; it’s having the debt,” Fusilier explained. "You have to have a credit history in order for a bank or lending institution to lend you money. They need to see that you have the means to repay the loan and the personal reputation to meet your obligations.”

This doesn’t mean to overextend your credit, but it’s a good idea to charge some items and pay the credit card bill in full at the end of the month. This keeps credit history current.
Once the credit card is obtained, use it wisely. Even though an item could be purchased on credit by paying the minimum credit card payment, "if you don’t have the cash to pay for it in full, don’t buy it,” said Fusilier. "It’s financially destructive to pay interest on credit card items. Pay the bill off every month. Paying interest on a sweater or toaster doesn’t do you any favors.”

Tracking expenses is an exercise every young adult should do. It can be as simple as jotting down what you buy for a few months or as intricate as a spreadsheet with categories of spending. Choose whatever method makes sense to you so you can get a clear look at how your money is spent and ensure that your monthly income is more than your monthly expenses.

Set up a savings account specifically for emergencies. "Ideally, if you could work up to having six to nine months of living expenses set aside, you’ll be much more comfortable and confident that you could survive should something happen to your job, your health, or that of your spouse’s, if you are married. Knowing you have that cushion can help you sleep at night,” Fusilier said. "It will probably take a few years, depending on your income and expenses, to reach this goal, but steadily, over time, it will happen. Trimming expenses can help you attain it faster.”

Even though a twentysomething has the world by the tail, smart young adults will begin to save for retirement as soon as possible. Once college and any advanced the first real job is landed, begin saving. If your company matches your contributions to a 401(k) retirement plan, make sure you are putting in the maximum allowed to take full advantage. "Companies have scaled back their matching contributions and many employees do not have the option. Whatever your situation is, set aside a steady amount into an account earmarked for retirement,” said Fusilier. "You have the benefit of time. It’s surprising how even a small amount set aside each month can grow into a significant amount.”

To trim everyday expenses, keep your goals in mind. Friends who continually beg you to spend more than you’re comfortable spending don’t have your best interest in mind. Stay within your allotment for entertainment dollars.

A disciplined approach with clear goals in mind for the future will help put young adults on the path to a solid financial future.

For more information, visit or call (337) 463-6231.

Posted by: Christine Fisher | Submit comment | Tell a friend

Categories: Finances

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