For many young adults, financial planning may seem like something that can wait until you're older. However, the investments you make in your 20s and 30s lay the foundation for your financial security, so it pays to start thinking about this early on. The tips in the following guide will help you take control of your finances so you can get the most out of your money and be prepared to take on large purchases or unexpected expenses in the future.

A Guide to Financial Planning for Young Adults

1. Avoid Carrying Balances

Cards and charge accounts can help establish credit and provide emergency funds, but making minimum payments each month to reduce balances is a drain on your finances. You’ll be paying interest on anything you buy with credit, including concert tickets, gas, and new clothes. Work on paying down your credit cards, and only charge as much as you can afford to pay at the end of the month.

2. Build Up an Emergency Savings

Put a portion of each paycheck into savings, even if it’s just $10 a month. Over time, these contributions can build up to a significant financial cushion. Having extra money set aside for emergencies allows you to handle unexpected car repairs, medical expenses, or lost income without going deeper into debt. 

3. Set a Budget

Spend a few months tracking your expenses to find out where your money goes. That daily morning cup of coffee might be costing more than you think, and you could find you’re paying for reoccurring subscriptions you no longer use. Once you have a handle on your spending patterns, plan out any purchases for the next month.

If you don’t have a lot of financial experience, try following the 50/30/20 rule. This plan states that half of your income should go toward housing and other necessary expenses, while 30% can be used for discretionary expenses. The last 20% should go toward your savings and paying down debts.

4. Learn About Investing

Investing can seem complex, but understanding the different savings vehicles and how to grow your wealth is essential for long-term financial stability. Read websites with investment tips for beginners, or work with a financial planner who will help demystify the markets. A professional can also assist you with establishing long-term goals and explain the options for achieving them.

Whatever your financial vision for the future might be, the professionals at Allen Financial Group in Troy, OH, will help make it a reality. They deliver proven financial planning advice and investment strategies to clients throughout the Miami Valley, using a combination of cutting-edge technology and old-fashioned expertise. Whether you need assistance navigating life insurance, annuities, or retirement planning, their team can help. Visit them online for more on their financial planning services, or call (937) 524-6260 to schedule an appointment.