10 Smart Money Moves for Single Women in Their 20s
Making smart movies is essential at any stage of your life. It is important to start out strong and make choices that will prepare you for wherever life takes you. You may stay single, end up with a partner or start a family, but the positive financial choices you make in your 20s can set you up to meet the next adventure and know that your future is taken care of. Learn ten steps you need to take now.
Start Planning for Retirement
The first thing you should do is plan for retirement. Contributing early and regularly means that you can get by with contributing a lower overall percentage of your income and you do not need to worry about catching up later. It makes sense to plan as though you are going to be responsible for your retirement on your own. This allows you to save enough and will leave you prepared. It may help you to be able to retire early. If you do not qualify for a 401(k) yet, open an IRA and begin contributing there. If you do qualify for a 401(k) be sure to take advantage of your employer’s match even if you are working on other financial goals.
Save for Your Future
In addition to retirement savings, it is important to set aside money for your other financial goals that you want to reach in the future. There may come a time when you want to purchase your own home or condo and begin building equity instead of renting.
Saving up for expenses like purchasing a new car can help you save money on interest. If you want to eventually start your own business, saving up capital to do that would be a great goal.
Create a Financial Plan
Where do you want to be in five years? What do you need to do financially to get there? Then break it down into yearly and monthly goals and steps. Be sure to include long-term goals like retirement as part of your plan. This may include going back to school to get your education to help with your next career goal.
Focus on Climbing the Career Ladder
Now is a great time to focus on the career ladder. It takes time and hard work to move up. Make clear goals and determine what you need to do to reach them. It may mean switching companies, moving to another city or going back to school. It may mean that you do side work or create a professional network and find a mentor to help you reach that goal. Break down the steps for the career path you want to take and start taking them. It is okay to switch directions at some point and choose to go a new direction if you find a better fit for you. Dreams can change, but the key is to keep moving forward toward that dream.
Make Sure You Are Budgeting
Budgeting is one of the biggest tools to managing your money properly. When you are single, it is easy to justify not creating a budget. Your expenses are straightforward and if you pay your bills what does it matter when and how you spend your money?
However, your budget can help you find areas you can cut back on spending to put more money toward savings or debt. Make your income a tool, and budget effectively. This does not mean you should not have fun, but determine how much you can afford to spend while working on your financial plan and stick to that amount.
Take Care of Your Credit/Debt
Your credit and debt can affect your ability to take your next financial step from buying a home to taking out a business loan to open your new business. Paying down your debt will free up additional money you can use toward savings. Late payments can make it difficult to qualify for a loan. Taking the time to fix any past mistakes and clearing up your credit report will make it easier for you reach your goals in the future.
Make Sure You Have the Right Insurance
Insurance is there to protect you.
It can be frustrating to see your income going to insurance each month, but it is there to protect you. When you are a single, short-term and long-term disability insurance can be a life saver, especially if you do not have an emergency fund saved up. This insurance will protect you if you are suddenly not able to work due to an injury or illness. Health insurance can keep you from going bankrupt when you are suddenly ill. Renter’s insurance can help you avoid the stress of replacing everything if you are robbed. Take the time to make sure you are protected.
Don’t Forget Life Insurance
When you are single, it may seem like you do not need life insurance. This is especially true if you do not have a child or anyone you are financially responsible for. However, you should have enough to cover your burial costs. You can avoid leaving the burden of those expenses on your family or friends. Many employers offer a basic policy that ought to cover those costs. If you are responsible for helping someone out financially, you may want to consider taking out a large enough policy that they can live off of the interest if they invested it.
Build Your Emergency Fund
An emergency fund is essential if you are single. It can be the thing that save you from being homeless if you were to suddenly lose your job. It can help cover unexpected expenses and take the worry and weight off. For people living on one income, a year’s worth of expense is a good goal. This will give you time to find a new job without too much pressure.
Put Everything in Order
Finally take the time to put everything into order. It may seem like it is too early to worry about it, but having a will and final wishes can make things easier for your loved ones if you were to pass unexpectedly or if you were to become ill suddenly. Making decisions about a living will or DNRs, organ donation, funeral plans and who to contact if you pass will not take long, and once done, you do not need to worry about it again. A document that includes any insurance information, bank and loan accounts will make it easier for someone to help you out if you need it. Usually a parent is a good person to give that information to, but if not you can give it to a trusted friend who understands the situation.