3 Things Your Parents Wished They Knew About Finances When They Were Your Age
How you can use them to get ahead now
Everyone has things they wish they had known when they were younger when it comes to finances, even your parents. Whether your family lives paycheck-to-paycheck or your parents are comfortably heading into retirement, there are financial decisions they wish they had made in their 20s. We’ve collected just three things older adults wished they had known about money when they were younger, so you can get a head start on your peers.
You have to start contributing to your retirement early
Sure, the idea of worrying about retirement when you are in your 20s might seem a little extreme, but now is precisely when you should start thinking about the future. The longer you save, the more your money will work for you. Your goal should be to set aside 15% of your paycheck for retirement, but not all young adults can manage that. Every little bit helps, so save what you can early.
If you can’t save 15% right now, don’t worry too much, but set up a plan to get to that number. Earmark any pay raises directly to retirement until you meet your 15% contribution number.
You should check your credit report regularly
Identity theft is a genuine threat, and you need to stay on top of your credit report to ensure nothing fishy is going on. Several services allow you to access your credit score for free, or you can request a free credit report from the three issuing bureaus once a year at annualcreditreport.com. Check over your report carefully and call about anything that seems out of place. It is easier to fix the problem the earlier you catch it.
Identity theft is a problem that continues to plague many Americans, and once the problem snowballs it can be hard to untangle the mess. Fixing the issue can take months or years, which might put your own goals on hold.
Setting financial goals keeps you on track
Financial goals are a significant motivating factor, and everyone should have a long-term, short-term, and mid-term financial goal. In your 20s, your short-term financial goal may be setting up an emergency fund, while your mid-term goal may be contributing the maximum to your 401k, and your long-term goal may have to do with paying off student loan debt or making a 20% down payment for a house. Check in on the progress of these goals regularly and readjust them as necessary.
Your financial goals should and will change as you grow, but you should always have some. Not only does it help you find the purpose in your savings, but it will also motivate you to find ways to reach your goals quickly.
Financial planning and smart money management are vital at any age, but starting early will help you make smart financial decisions throughout your adulthood. If you feel unsure about your financial decisions, don’t be afraid to contact a financial planner.
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