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20-Somethings Guide to Financial Happiness

When you’re in your 20s, life is fast-paced with changes happening every moment. From switching jobs to constantly moving from apartment to apartment, your 20s can be a whirlwind, which makes it even more important to have a stable financial foundation.

While your fast metabolism and flexibility may disappear after your 20s, any financial debt you incur is here to stay until you pay it off. Therefore, it is essential to take responsibility of your finances in your 20s so you're not paying for it for the rest of your life. Check out these tips on reaching financial happiness before you hit your 30th birthday:

  1. Plan ahead. To get to where you want to be in life, you need goals and a plan to reach them. Contrary to what you might think, things do not just happen—you have to make them happen. So take some time to think about what you really want out of life and where you really want to be in five years.  Having goals and priorities makes creating and sticking to a budget a lot easier. 
  2. Create a budget. Live by the 50/20/30 budget rule, which breaks down spending into these three main categories: essential expenses, financial priorities and lifestyle choices. Using this rule, no more than 50% of your take-home pay should go to essential expenses, which include housing, transportation, utilities and groceries. At least 20% of your salary should go to financial priorities, which include retirement, savings and debt payments. And, no more than 30% of your income should go to lifestyle choices, which include gym fees, hobbies, restaurants, shopping, phone plans, charities, internet and other miscellaneous expenses.
  3. Make saving a habit. You work hard for your money, so you should be the first person you pay when your paycheck arrives. Make an arrangement with the bank to automatically divert part of your paycheck every month into a savings account. That way, you won’t have to remember to transfer the money manually or be tempted to spend it on something you don’t really need or want. Using this method, you won’t  miss the money when it’s gone because you will never see it in the first place. Out of sight, out of mind and safely in your savings account!
  4. Pay off your credit cards. If you have credit card debt, there is no time like the present to take care of that debt once and for all. Talk to a Delta Community representative to create a plan to help pay off debt without dipping into your current savings.
  5. Start investing in your retirement. While retirement may be the last thing on your mind right now, you will be happy one day that you started planning for your future in your 20s. The sooner you begin investing for retirement, the easier the process will be, as you will accumulate more money over time. 
  6. Establish credit. In order to qualify for the best interest rates on a credit card, auto loan or mortgage, you need to start building a solid credit history. Once you get started, be sure to monitor your credit regularly, make bill payments on time and keep balances low to make sure you stay on track. 
  7. Build a helpful network of peers and acquaintances. While it is definitely important to study hard, the saying “it’s not about the grades you make, but the hands you shake” does have some truth to it. Your 20s is a great time to start working on your interpersonal skills and maintaining a network of valuable relationships. You never know when personal contacts can come in handy to further your career or even enhance your personal life, so the earlier you begin networking, the better. 
  8. Cut the financial umbilical cord. You have your own apartment and your own paycheck so isn’t it time you grew up? If mom and dad are still preparing your taxes, balancing your checkbook or managing your investments, consider this: whoever controls your finances, controls your life. If you are uncomfortable managing your finances on your own, schedule a meeting with one of our Delta Community financial experts. A little help from an expert can go a long way toward financial independence. 

The most important advice of all? Have fun, enjoy your youth and don’t take things too seriously. You can make memories, meet new people and try new things without going into debt. The key to keeping your finances in check and having fun is balance. Having stable finances will make everything you do that much more enjoyable.