Getting Started: Tips for 20-somethings to handle finances

McClatchy-Tribune Information Services

July 6, 2015

Finding a job, renting an apartment, repaying student loans ó when youíre just starting out, getting on your financial feet can be overwhelming.

A 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 financial lives.

The 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.

"Competing 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."

So where do you begin? Weliver offered these suggestions.

Buffer 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.

Ideally, 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 first step.

"Weíve 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 pretty easily."

Get 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.

True, 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 significant savings.

You donít have to relinquish a big chunk of your paycheck to get the match, either. According to, 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.

Repay 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.

Given 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

"Those are big debts, and it limits what you can do," Weliver said.

So 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.

"No one ever regrets paying off debt," he said.

Once the debt is gone, you can take your monthly payment and put it toward savings. Or, said Weliver: "Take that vacation finally."