You're young free and single, and your 20's are your playground, but they're also a decade in your life that will count a whole lot towards your future. While financial planning may seem boring and unnecessary, the smart, savvy you will recognise the need to plan for a future that could be difficult and one where you may run into some bumps on the road. Here are five relatively easy moves you can make to make your financial future a more stable one.
Write Down Your Goals
Without creating a list of long- and short-term goals, it is impossible to determine if you are making the right financial decisions. Consider things like: ;
How you envision your retirement;
If and when you'd like to become a homeowner;
Whether you plan to have children;
Which debts you want to focus on paying off first
Credit Cards are a necessary evil. Choose yours carefully and monitor your spending with mobile banking apps.
And remember, you don't need to map out your entire life. These goals will change and evolve over time, but thinking about where you want to be in 1, 5, 15 years can help you hone in on what kinds of financial decisions you should be making day-to-day.
Start Saving for Retirement
I know what you're thinking. “I'm only in my 20s, I can save for retirement later, right?" Technically, yes, but it is in your best interest to start now. The sooner you start, the less you'll have to save, because the effects of compound interest will have longer to mature. This means you can contribute less and end up with more than if you were to wait to start saving in your 30s. Check with your employer to see if they have a 401(k) plan that you can make automatic contributions to through your paycheck. If they offer a matching plan, this is essentially free money, so try to contribute enough to maximize the amount they'll match.
Stop Maxing Out Your Credit Cards
Young adults are often guilty of treating credit cards like free money. There is often a “charge now, worry about it later" mentality when it comes to credit card usage. Now is the time to stop. Not only is this hurting your credit score, but it's costing you a ton of money in interest. Your 20s should be a time when you start taking your finances more seriously and thinking long-term. You'll also likely be dealing with a whole new set of financial responsibilities such as rent, utilities, student loan payments, perhaps a car loan – and worrying about how you're going to pay off a high credit card balance is the last thing you need to be thinking about.
Rather than charging a vacation or nights out with friends to your credit card, take some time to create a budget and determine how much you can reasonably spend on your social life and other indulgences, while still being able to save and pay for necessities. A credit card should only be used when you know you can pay off the balance in full at the end of the month.
Take Control of Your Credit Score
Excellent credit takes years to build, so if you haven't started building a credit history, or if you haven't used your credit responsibly, now is the time to start taking charge. Your credit score is calculated based on the length of your credit history, your payment history, the amount of debt you owe, the amount of new credit accounts you have opened, and the types of credit accounts you have. You can check your credit reports and score with each of the 3 major bureaus (Experian, TransUnion, Equifax). It is in your best interest to ensure you are on the path to having a great credit score so that when the time comes to borrow money (such as when applying for a mortgage or a car loan) you'll be seen as an excellent candidate to lenders.
Create an Emergency Fund
Life is full of ups and down and unfortunately that sometimes means unexpected payments. Since funds and income are typically somewhat limited in your 20s, you don't want to suffer a major setback when an unexpected expense comes your way. Instead, open a separate savings account and designate it as your “emergency fund". Ideally, an emergency fund should cover 3-6 months' worth of expenses. While it may take some time to build up, make this a priority so that you have it ready as your “secret weapon" when you need it.
"Sh*t!" my daughter exclaimed as she dropped her iPad to the floor. A little bit of context; my daughter Victoria absolutely loves her iPad. And as I watched her bemoan the possible destruction of her favorite device, I thought to myself, "If I were in her position, I'd probably say the exact same thing."
In the Rastegar family, a word is only a bad word if used improperly. This is a concept that has almost become a family motto. Because in our household, we do things a little differently. To put it frankly, our practices are a little unconventional. Completely safe, one hundred percent responsible- but sure, a little unconventional.
And that's because my husband Ari and I have always felt akin in one major life philosophy; we want to live our lives our way. We have dedicated ourselves to a lifetime of questioning the world around us. And it's that philosophy that has led us to some unbelievable discoveries, especially when it comes to parenting.
Ari was an English major. And if there's one thing that can be said about English majors, it's that they can be big-time sticklers for the rules. But Ari also thinks outside of the box. And here's where these two characteristics meet. Ari was always allowed to curse as a child, but only if the word fit an appropriate and relevant context. This idea came from Ari's father (his mother would have never taken to this concept), and I think this strange practice really molded him into the person he is today.
But it wasn't long after we met that I discovered this fun piece of Ari Rastegar history, and I got to drop a pretty awesome truth bomb on Ari. My parents let me do the same exact thing…
Not only was I allowed to curse as a child, but I was also given a fair amount of freedom to do as I wanted. And the results of this may surprise you. You see, despite the lack of heavy regulating and disciplining from my parents, I was the model child. Straight A's, always came home for curfew, really never got into any significant trouble- that was me. Not trying to toot my own horn here, but it's important for the argument. And don't get the wrong impression, it's not like I walked around cursing like a sailor.
Perhaps I was allowed to curse whenever I wanted, but that didn't mean I did.
And this is where we get to the amazing power of this parenting philosophy. In my experience, by allowing my own children to curse, I have found that their ability to self-regulate has developed in an outstanding fashion. Over the past few years, Victoria and Kingston have built an unbelievable amount of discipline. And that's because our decision to allow them to curse does not come without significant ground rules. Cursing must occur under a precise and suitable context, it must be done around appropriate company, and the privilege cannot be overused. By following these guidelines, Victoria and Kingston are cultivating an understanding of moderation, and at a very early age are building a social awareness about when and where certain types of language are appropriate. And ultimately, Victoria and Kingston are displaying the same phenomenon present during my childhood. Their actual instances of cursing are extremely low.
And beneath this parenting strategy is a deeper philosophy. Ari and I first and foremost look at parenting as educators. It is not our job to dictate who our children will be, how they shall behave, and what their future should look like.
We are not dictators; we are not imposing our will on them. They are autonomous beings. Their future is in their hands, and theirs alone.
Rather, we view it as our mission to show our children what the many possibilities of the world are and prepare them for the litany of experiences and challenges they will face as they develop into adulthood. Now, when Victoria and Kingston come across any roadblocks, they have not only the tools but the confidence to handle these tensions with pride, independence, and knowledge.
And we have found that cursing is an amazing place to begin this relationship as educators. By allowing our children to curse, and gently guiding them towards the appropriate use of this privilege, we are setting a groundwork of communication that will eventually pay dividends as our children grow curious of less benign temptations; sex, drugs, alcohol. There is no fear, no need to slink behind our backs, but rather an open door where any and all communication is rewarded with gentle attention and helpful wisdom.
The home is a sacred place, and honesty and communication must be its foundation. Children often lack an ability to communicate their exact feelings. Whether out of discomfort, fear, or the emotional messiness of adolescence, children can often be less than transparent. Building a place of refuge where our children feel safe enough to disclose their innermost feelings and troubles is, therefore, an utmost priority in shepherding their future. Ari and I have come across instances where our children may have been less than truthful with a teacher, or authority figure simply because they did not feel comfortable disclosing what was really going on. But with us, they know that honesty is not only appreciated but rewarded and incentivized. This allows us to protect them at every turn, guard them against destructive situations, and help guide and problem solve, fully equipped with the facts of their situation.
And as crazy as it all sounds- I really believe in my heart that the catalogue of positive outcomes described above truly does stem from our decision to allow Victoria and Kingston to curse freely.
I know this won't sit well with every parent out there. And like so many things in life, I don't advocate this approach for all situations. In our context, this decision has more than paid itself off. In another, it may exacerbate pre-existing challenges and prove to be only a detriment to your own family's goals.
As the leader of your household, this is something that you and you alone must decide upon with intentionality and wisdom.
Ultimately, Ari and I want to be the kind of people our children genuinely want to be around. Were we not their parents, I would hope that Victoria and Kingston would organically find us interesting, warm, kind, funny, all the things we aspire to be for them each and every day.
We've let our children fly free, and fly they have. They are amazing people. One day, when they leave the confines of our home, they will become amazing adults. And hopefully, some of the little life lessons and eccentric parenting practices we imparted upon them will serve as a support for their future happiness and success.