Welcome to the world of young adult finances, readers! After yesterday’s post on the need of retirement planning in early 20’s , this is an excellent followup post. Here I’ll do less talking and let the infographic speak about what I wanted to say.
Early 20’s or late 20’s whenever you join in to work force is the best time to start financial planning. The other day I was talking to an intern in our office. He’s just out of college. To him the life’s all about spending money, partying, seeing places. I tried convincing him and he seemed interested to know more. I didn’t tell him about my blog but we planed to meet again for next round of talk.
Perhaps I got my first mentee whom I can teach about best practices of personal finance. He’s one of the typical generation X population. Years ahead of them before retirement, they don’t care. perhaps we were like the same when we were in our 20’s.
Anyway, if you’re just out of college and want to know what you should do and shouldn’t do financially, then bookmark this page and refer frequently. If you thin spending money is the coolest thing to do, you’d son realize spending money without saving is the most foolish decision you could take, more foolish than parting away with someone you love!
Folks, having a good credit is absolutely necessary for a good financial future. A score may decide your future employment as well. Credit score is the only reliable and measurable scale of your character and dependability. I realized this within the first year I immigrated in to this country.
My only goal, back then, was to have a high credit score. Once I started monitoring I kept on taking better decision, to keep the score high. I always paid all my dues in full and on time. I never let even a single medical bill to go past due. I took auto loan at 0% APR to build my credit, even though I could have paid cash down.
My first credit card was a $500 secured card with Bank of America back in 2005. Slowly I built on my credit, I got my first real credit card after living for 2 years here. Now my credit score is 800+, within 9 years.
Make a high credit score your next goal. Once you do that, you’ll automatically keep on taking right decisions. Managing finances would become a healthy challenge for you to meet.
Take your financial decision wisely and keep on monitoring score. Every year you can order one credit report free of cost from Annual Credit Report as per federal law. You can get twice a year free score and report from Quizzle.
But you need to monitor this every month to be on track. How you can do it?
You can open a free account with Credit Sesame and monitor your score every month and see how your spending pattern and repayment pattern affect you. But , Credit Sesame score is not exactly the real FICO score it’s as close as you can get at no cost.
The best options are all paid options, I use Experian service and pay a nominal fee every month. You may not have to pay as Credit Sesame provides very close match to the actual score.
Once you start monitoring your score, I am telling you, your habits would all aligned to the best financial principles. A small monthly amount that I pay to keep on track is worth it as it motivates me to save thousands else where.
If you can get through to your mentee, you will have done a good deed indeed!As the Bible says, though “there are none so blind as those who won’t see”.
I’ll keep you updated on my progress.
Deb @ Saving the Crumbs says
Hmm….I don’t think I can agree with your statement: “Credit score is the only reliable and measurable scale of your character and dependability.” I think it is A measure, but not always a reliable or accurate one. If you don’t take out loans and never use a credit card and therefore don’t have the highest credit score, you can still be reliable and dependable financially.
I know from where you are coming. For is there any measurable parameter to gauze your character in financial term? Even if you don’t use credit at all, still employers, housing associations look for negative reporting on your name. You should be clean on paying your bills.
Brandy @ Busted Budget says
To be honest, I was not the most responsible with my financial decisions in my early 20s. I had everyone convinved I was, though. I took out too many student loans, used a credit card, and bought I new car. But, I looked like I had it together. You never know what is going on behind closed doors.
And I was playing with stocks and used to be the day trader in my 20’s. We all were irresponsible up to certain extent. Now I wish I did start with retirement saving as soon as I joined the work force.
Emmanuel M'M says
A few spelling errors in the article but they are typos.
Regarding the content, spot on. I graduated 2 years ago and I am still trying to get myself into the forward thinking orientation. But having a strong (yet sometimes inconsistent) saving culture has helped.
Glad you started early. Way to go!
Emmanuel M'M says
Next year is my year to going back to being frugal and forward thinking. I think enjoying my salary is finally out of my system. Totally worth the one lost year
I’d advice you to start this year. but do whatever works for you. Enjoying life is always good, its better if it combines with a bit of saving too.
Emmanuel M'M says
Will definitely try even though my personal financial year (tied in with my year’s goals) is in Feb. Will do groundwork before the year ends and start as soon as. Thanks for the advice
Make a budget, make a plan. Have some room for fun, wondering around and spending on things you love. Once you have this room, automatically your habits will change to better financial habits. I’d say track your spending from now on. Do that for few months and then see where you can cut back from next year. Then budget for things accordingly.
Emmanuel M'M says
I already do all those. I have a spreadsheet, I balance my account. I have no credit cards. To infinity and beyond now with the retirement plans! Thanks for the advice. Will keep reading
I thought you were able to obtain three credit scores once a year for free from each reporting agency. I could be wrong though,
Mathematically you’re right. But when you want to check your report, you want all of them at once. Not all institution reports to all three agencies. Up to your choice, whether you want Experian in January, Equifax in May and Transunion in September, something like that or check all three reports at once.
You can’t see one agency’s report more than once a year on Annualcreditreport
I’m glad you shared the inforgraph here – that’s the type of picture that is literally worth 1000 words. It can be difficult to focus on retirement right after your done focusing on school. But you are right, it’s definitely worth it.