Navigating Finances in Your 20s: A Beginner's Guide to Adulting

a diverse group of youths happily learn the tips and tricks to responsibly handle their finances.

Fellow young adults and recent grads, welcome to the terrifying yet exciting world of adulting! As we step into this new phase of life, filled with responsibilities and possibilities, one aspect that often stands out is managing finances. And let’s face it, in today’s world, understanding finances is as vital as relying on Google Maps—it’s tough navigating life without it. So, buckle up and get ready for a crash course in adulting. We’re breaking down the five most important financial decisions for young adults in their 20s.

1. Pay Student Loans:

Ah, the dreaded student loans. For many of us, they're like a dark cloud hovering over our heads. But don’t let that keep you from tackling them like a champ.

First things first, start by understanding your loan terms and interest rates. Then, use helpful tools like student loan financial calculators to map out a repayment plan that won’t leave you eating ramen noodles for the next decade. Also, you should definitely consider putting away extra money towards paying off those loans quicker. Remember, every effort makes a difference!

You can also lighten the load by exploring options like loan consolidation or refinancing, which can possibly lowering your monthly payments.

2. Find the Right Bank Accounts:

Choosing bank accounts might not sound thrilling, but it's a crucial step in adulting. Look for a checking account with low fees and easy access to ATMs. Many banks offer free checking accounts, which are a great place to start.

When it comes to savings accounts for young adults, seek out options with FDIC Insurance and decent interest rates—every penny counts! Online banks are often a hidden gem, offering better rates and fewer fees than most traditional brick-and-mortar banks. Just keep in mind, transactions with online banks may take 1-2 business days to process, so your money might not be available right away in times of need.

HELPFUL FYI: Online banks operate solely online, so don't confuse them with traditional banks, which have physical branches as well as online services.

3. Contribute to Your 401(k):

Retirement might seem lightyears away, but it's never too early to start saving. If your workplace offers a 401(k) plan, jump on it like it's the last slice of pizza. At the very minimum, contribute enough to maximize employer matching—it’s basically free money. Plus, even if you can only spare a small chunk of your paycheck for retirement, the magic of compound interest will gradually grow your savings over time.

4. Build Your Credit with a Secured Credit Card:

Building credit is like leveling up in the game of adulting. It’s important for the future financial opportunities you will encounter, like buying a car or renting an apartment.

Start by applying for a secured credit card designed for building credit. You will need to put down an initial security deposit (between $300 and $3,000), which ultimately protects you and the lender from the risk of missed payments. Use the card responsibly by making small purchases and paying the balance in full each month. Over time, your credit score will rise, opening doors to better financial options.

5. Create a Budget (and Stick to It!):

Here comes the cornerstone of financial responsibility—the budget. Creating a budget might sound daunting, but it's simpler than you think. Start by tracking your expenses for a month to understand exactly where your money goes. Then, categorize your expenses into “essentials” (rent, groceries, utilities) and “non-essentials” (dining out, entertainment).

Set limits for each category and stick to them. There are several budgeting apps and resources out there, including calculators for spending less and home budget calculators. You will master your budget game in no time!

Bottom Line: This is Adulting

Remember, Rome wasn't built in a day, and the same goes for financial independence. So, take those strides, stay disciplined, and watch how they add up over time.

As you start this journey, remember these steps are just the beginning, setting the stage for a secure financial future. With time, you’ll become a pro at managing your finances.

So welcome to adulthood—it’s tough, but you’ll love the ride! Get started at Academy Bank today!

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Opening a savings or checking account requires an opening deposit. The opening deposit requirement starts at $25 depending on the product. A monthly service charge may apply, depending on the deposit product. Closing your account within 90 days of opening will result in a $20 early closure fee.