It is back to school time for Kansas children of all ages. For recent graduates, this marks the first year of school independence. Instead of returning to books and laptops, it is time to buckle down in the workplace and create financial stability. For new graduates that are in their 20’s, there are some things that can be done in this decade to help create a stronger financial future.
First things first, build an emergency fund. This may seem counterintuitive when many young people are struggling to make ends meet. However, this is precisely why an emergency fund is important because one major catastrophe can lead to financial ruin. An emergency fund should cover expenses for six months. Next, pay-off credit card debt. This debt can seriously weigh down your credit score. The sooner these are paid off, the better. Though retirement may seem to be in the distant future, this is the time to open an IRA. As a rule of thumb, you will need 85% of your pre-retirement income to comfortably survive retirement.
The last two tips for a strong financial future are less about planning and more about what you should do. This is the time to take a job that you love. For 20 somethings without children or who are unmarried, this might be a great time to follow your passion before financial obligations make it more difficult to follow your dreams. Even if money is scarce, take a trip of your dreams, but do not use credit cards to finance it. Rather, save for the trip and enjoy!
If an unexpected life event leaves you in a financial dogfight, it may be time to consider bankruptcy. A Chapter 7 or 13 bankruptcy may be the right tool to eliminate credit card debt.
Source: The Huffington Post, “5 Things You Can Do Every Decade For a Bright Financial Future,” Aug. 7, 2014