a job, renting an apartment, repaying student loans ó
when youíre just starting out, getting on your
financial feet can be overwhelming.
recent study by Money Under 30, a personal finance blog
for 20-somethings, found that many young adults have to
make significant compromises when starting their
study, which surveyed more than 250 individuals ages 21
to 29, found that 14 percent of 20-somethings are not
saving anything at all; nearly half have student loans
with an average outstanding balance of $36,584.
financial priorities is a big challenge for young
Americans," said David Weliver, Money Under 30ís
editor and publisher. "Just getting that deposit
for a first apartment, saving for a car, paying for
weddings ó thereís a lot."
where do you begin? Weliver offered these suggestions.
your bank account. Start with building up cash savings
in a bank account. Weliver refers to this as the
"bank account buffer." The idea is to put
aside enough money that if your car breaks down or you
need to travel home for an emergency, you donít have
to put the expense on a credit card.
youíd save about $1,000 or two weeks of pay for your
buffer. Thatís far less than the three- to six-months
worth of income that many financial advisers suggest
having stashed away in an emergency savings fund. But
Weliver argues that the buffer is a more achievable
found that the three or six monthsí (pay) in an
emergency fund is overwhelming to someone who has just
graduated and is earning $25,000 a year," he said.
"But $1,000 is easier to get your mind around, and
maybe by working a couple of weekend gigs or selling
something youíre not using, you can get halfway there
the company match. Your next step should be to take
advantage of the company match in your jobís 401(k) or
retirement plan, if one is available to you.
retirement may seem like the last priority when youíre
in your 20s. But if you forgo the company match, you
give up free money that over decades could add up to
donít have to relinquish a big chunk of your paycheck
to get the match, either. According to
401khelpcenter.com, which keeps track of retirement plan
trends, 40 percent of employers match 50 cents per $1 of
contribution, typically up to 6 percent of pay. So if
you earn an annual salary of $35,000, you only have to
save $2,100 per year to get the full match. Keep in
mind, too, that your contribution is made before taxes.
As a result, if youíre in the 15 percent federal
income tax bracket, you really only give up around
$1,800 in take-home pay.
student loans or save more. According to the Money Under
30 survey, 19 percent of 20-somethings say that repaying
student loans is their top financial priority. Thatís
up from 12 percent in 2014.
that student loan debt now tops $1 trillion nationwide,
itís not surprising that college graduates want to pay
off their loans as quickly as possible
are big debts, and it limits what you can do,"
once you have some emergency savings put aside and youíre
taking advantage of the company 401(k) match, Weliver
said young people have a decision to make: Stash away
more for retirement and other needs or focus on paying
off student loans, with the goal of being debt-free
within a certain period.
one ever regrets paying off debt," he said.
the debt is gone, you can take your monthly payment and
put it toward savings. Or, said Weliver: "Take that