Getting into good money habits while you’re young can prevent future consequences. Here are a few tips to help 20-somethings get started.
Learn how to use a credit card. The right way.
This is a hard lesson to learn, but we should heed the warnings of our elders and be careful about how we use our credit cards. Millennials, like myself, tend to use credit cards to buy clothes, entertainment, and gas, while older (and sometimes wiser) generations use it primarily for travel and major repairs. Don’t get me wrong, having a credit card is a great way to build your credit score… as long as you are doing it the right way.
Don’t pull credit, until you’re sure.
Credit inquiries can negatively impact your score up to five points, which is especially damaging to a young adult who doesn’t have a long credit history. The rule of thumb here is to shop around before buying something that you plan on taking out a loan for. Once you’ve made your final decision, then you can have your credit pulled to make the purchase.
Build your credit.
Your credit is the number-one key you have to financial freedom, so build it wisely. There are numerous ways to build good credit, including paying your student loans on time, paying your car loan on time, and diversifying the your loan types (credit cards, installment, mortgage, etc.) If you don’t know where to begin, make an appointment to come into an Alltru Credit Union branch for some one-on-one credit counseling with our experts.
You don’t have to be rich to invest.
There’s a big notion that only people with a lot of money should invest in long-term saving. Even though you most won’t get rich overnight, it’s never a bad idea to have a long-term saving plan. Just taking a little bit out of each paycheck and investing it into a High Yield Online Savings account or a getting a Certificate of Deposit will help you in the long run.
Stop spending so much money socializing.
Like most millennials, I too have fallen victim to wasting money on “the short term.” You know, things like going out to eat or going to the movies, which for the time being is great, but as life happens, you’ll come to realize how much you need that savings account for kids, emergencies, or your retirement. I’m not saying that in your 20s you should stay at home every night, but set some boundaries and make sure you’re saving as much as you’re spending.
“Money is a guarantee that we may have what we want in the future. Though we need nothing at the moment it ensures the possibility of satisfying a new desire when it arises.” —Aristotle
So, the next time someone from an older generation gives you some financial advice, just take a second and listen to them. They may be telling you from experience.