Financial Planning Ideas for Young Adults in Their 20s

Financial planning ideas for young adults, especially for those of you who are still in your 20s are very important. Good habits from a young age like this are useful and have a long-term effect for a stable future foundation. With the following financial planning ideas, you will be wiser in making big decisions and ready to face unexpected circumstances.

Best Financial Planning Ideas for Young Adults in 20s

• Budgeting

Creating a budget is the main step for those of you who are still new to financial planning. This is the basis of financial planning because with a recorded budget you can track income and expenses. Through a budget, it’s easier for you to separate expenses for needs and wants so as not to be wasteful.

The manual and traditional way to create a budget is to prepare a special book and record it every time. You don’t need to create a budget manually in a book if this is too much trouble. Now there are many budgeting applications that you can download and use easily as income and expense monitors.

• Determine Financial Goals

You want to be more organized in terms of finances, of course, not without reason, right? In making financial planning, you need to determine the financial goals, whether you want to buy a house or others. With goals that you create yourself, you will be more diligent in saving and stick to the financial planning.

• Save for Long-Term and/or Short-Term

Financial advice for young adults is that you must have a goal in saving and managing your finances. After determining the goal in planning your finances, divide the goals again based on the short and long term. Owning a house, going on vacation abroad, and buying a new car or gadget are short-term goals.

Even when you are saving money to get married, this can be a short-term and long-term goal. Meanwhile, managing emergency and pension funds can be for the long term that can be used in the future. You must have set a specific goal to achieve it by setting aside a portion of each salary.

• Have Emergency Funds

Don’t just focus on needs and wants, because you also have to have funds for unexpected needs. You may not have thought about it, but what if you suddenly get sick or your car suddenly breaks down on the road? Situations like this are very unpredictable and require expenses that are also unpredictable.

Young adult financial planning especially in your 20s is very important in order to manage your finances wisely. One of which is building an emergency fund for your financial safety net providing peace of mind and protection. Emergency funds can be used with the aim of saving living expenses for 3-6 months in an easily accessible account.

• Have a Separate Savings Account

For you who want to be specific in managing your finances, having a separate savings account is a good idea. One savings account can be used for daily needs and short-term goals, while the other is for long-term goals. This way, you will avoid the temptation to use savings for impulsive things and be able to keep saving up.

• Pay Off High-Interest Debt

Even in your 20s, some of you probably have high-interest debt, including credit card debt or student loans. If you want to manage your finances well, it’s best to pay off your high-interest debts first. This prioritization helps to minimize interest costs, and redirect the payments to savings and investments once you’ve eliminated high-interest debt.

• Start to Invest

Simple financial planning ideas for young adults include learning about investing to help you prepare for a better future. What you need to learn are instruments such as gold and mutual funds as the simplest with low risk. If you’re already proficient with more stable finances, you can try to dive into the world of stocks.

• Increase the Financial Knowledge

No matter how old you are, learning how to plan your finances is very useful now and in the future. Increase your financial literacy so that you are stronger, more knowledgeable, and more skilled in managing your long-term finances. The way to do this is by reading lots of books or learning from webinars to podcasts about finance.

Financial planning ideas for young adults help you avoid the trap of consumer debt. Financial planning is also good because it’s useful in organizing finances so that you’re freer in determining your lifestyle. In making big decisions, you will no longer hesitate and can choose the wisest decision.