5 financial milestones to reach in your 20s
From: washingtonpost.com
To be a 20-something is to wrestle again and again with big life moments: Graduating from college. Getting a job. Moving into your own place. Getting another job. Getting married. Buying a house, maybe, or having a kid.
Each milestone comes with plenty of reasons to worry about money. Or as millennial-focused financial adviser Sophia Bera more enthusiastically puts it, “major planning opportunities.”
And that really matters: Your 20s are when adult things start happening, and the way you handle them can ripple through the rest of adult life. Start saving and taking care of your credit now, and you could save thousands of dollars later on.
So, 20-somethings, make the most of it. To help out, here’s some advice from financial planners who work with young people — milestones to aim for before you turn 30 and tips that could give you a big boost later in life.
Start saving for retirement – now
Employee Benefit Research Institute surveys suggest that many people delay saving for retirement.
Young people are less likely to have jobs that offer a retirement plan, the data show, but even those that do are less inclined to save than coworkers a few decades their senior.
Financial advisers say that’s a mistake. Money invested in your 20s has much more time to grow, meaning you might not need to set as much aside later on in life.
And if your employer matches those contributions, your retirement savings will grow even faster. Advisers recommend putting enough aside to max out employer matches.
That’s why advisers like Bera and Antwone Harris of Charles Schwab say retirement savings is one of their top priorities for clients, even above paying down student loans.
Harris gives his clients an example of the importance of starting early: Someone who saves money for 10 years starting at 25, assuming steady growth, will retire with more than someone who starts at 35 and saves for the next 30.
Put another way, you can put away 10 to 15 percent of your income in your 20s, or you can wait and save 25 percent or more in your late 30s to get the same result, Harris says. Wait even longer, and in your late 40s, you’ll have to put away 35 percent just to catch up.
“Most people go, ‘Well, when I start to earn more money, I’ll save more.’ They just don’t realize how critical those initial years are and how much less they’d have to save over time,” Harris said. “It makes a huge difference.”
