Financial Goals for 20 Somethings

The following is a post that I submitted to Betterment for their New Years Series on Finances. They graciously agreed to host my article and am providing it here so that my regular readers can view it.

When anyone is starting out as a young adult, they are immediately faced with the new challenge of tackling their own finances. This often includes paying their bills for the first time, opening up a savings account (if they don’t already have one), renting an apartment, etc. All of the everyday things that may not seem all that important to experienced adults can be giant hurdles to someone fresh out of college. Having experienced this first hand and hearing from many other young adults, the biggest challenge is often not knowing what your focus should be – similar to not knowing what kinds of questions to ask. It’s hard to know what you don’t know. Even the most financially responsible individuals in their twenties may not be doing all that they can because they lack experience. So, what should a person fresh out of college be doing to successfully manage their finances?

Set Financial Goals

It is important to set financial goals at any stage in life. While a lot can be said about why they are important, the simple fact is that financial goals help you prioritize your finances. Even the most dedicated saver could be wasting money if they don’t know what they want to do with their money. For example, I would consider myself a saver more than a spender. Yet, it wasn’t until recently that I wrote down my financial goals. Prior to this, my wife and I were doing a decent job of saving, but we still splurged on some unnecessary items. Once I wrote down my goals, I realized what it would take to get there. I understood exactly how much we needed to be saving and investing to reach our goals. Writing them down and making them tangible was the extra motivation I needed to accomplish a lot more with my money. If you haven’t taken the time to write down your financial goals, this is the best time of the year to do it.

Things to Consider in Your Financial Goals

Talking about financial goals in the abstract is one thing. It is much more helpful to give you real examples. You can check out my financial goals on that I established a couple months ago, but here are some examples of financial goals that people in their twenties (and perhaps different age groups as well) should consider:

  • Pay Off School Loans
  • Build up an emergency fund equivalent to 6+ months of income
  • Save money for a down payment on a house/condo
  • Take out a life insurance plan (maybe even a high risk life insurance plan)
  • Open a ROTH IRA and maximize your contributions (Be sure to understand the Solo 401k Rules)

These are just some of the things that every young person should consider for their financial goals. Be intentional about making them realistic and specific enough. You may even want to establish deadlines for each of these goals. When you are setting your resolutions for the new year, make sure to include financial goals and you won’t regret it.

What will you include in your financial goals?

 

7 Responses to Financial Goals for 20 Somethings

  1. When looking at your list I guess we are ahead of the game. We have no debt other than our mortgage. We are working on paying that off. We are also working on our Emergency savings and our investing for retirement. These are our goals right now.

  2. Nice article Corey. You’re right, the transition for many living a life with a lot of disposable income living under their parents roof to living on their own and being completely responsible for their own finances can be quite challenging. Before this happens, some aren’t even aware of the word – budget 😉 These are all excellent goals for people in their 20s. A budget is a way to make it all happen.

  3. Juan says:

    My financial goals include paying off student loans and saving up enough to take a trip off to Chile to teach English for a year.

  4. My financial goals for 2012 are:

    Financial:
    – Accumulate at least $40,000 for investments during 2012, beginning 2013.
    – Create feasible plan 10 year and review the priorities.
    – Diversify the nest egg.
    – Think about additional source of income.

    Blog:
    – Regular monthly updates
    – To cover 6 themes
    I have no intentions to move towards an entertaining blog with 2-3 weekly posts. I will endeavor my best efforts to stay on personal subject of financial independence.

    Educational:
    – Create list of books to read & read them- 12 books in minimum.
    – Publish reviews.
    – Have solid understanding of mutual funds and energy sector stocks.

    Family Budget:
    – Stay under $75,000 with the family expenses
    – Accumulate $7,000 towards durable goods replacement over 10 years.

  5. It’s amazing how many of my peers in our 20’s do not have an emergency fund. Great advice!

  6. WorkSaveLive says:

    I like your goal on the Roth IRA.

    My goals include: fully-fond a Roth IRA, take a vacation, and save up to pay CASH for a new car.

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