Are you wondering what kind of repayment plan is best for your student loans? How about how much you should be contributing to your 401(k) or which career path is best for you?
Welcome to the wonderful world of your 20s, where you have a lot of questions but not a whole lot of answers (yet).
Although it’s up to you to figure out how to live your best life, you’re not alone when it comes to figuring out how to manage your money. Dozens of personal finance blogs are spilling the beans about smart money management.
Follow these tips from expert personal finance blogs
To get started, check out these eight financial tips for 20-somethings from the writers behind a few leading personal finance blogs.
1. Pay off your debt ASAP
Even though you’re young, you might already have some major debt to deal with in the form of student loans. In 2017, the average graduate left school owing $39,400 in student loan debt.
You might also be dealing with an auto loan or credit card debt, which can be especially tough to pay off because of high interest rates.
Instead of letting debt hang over your head, Marissa Lyda of The Budgeting Wife recommends making debt payoff a priority.
“Pay off your student loans, car loan, and credit cards as quick as possible for a foundation to your financial future,” said Lyda.
If you make extra payments, you can get out of debt ahead of schedule. Once you’re debt-free, you can shift your focus to other financial priorities.
“When you’re young and in your 20s, you have the power to build some serious wealth for your future,” said Lyda. “But it all starts with being debt-free.”
2. Build a 3- to 6-month emergency fund
Although paying off debt is a priority, it shouldn’t eat up all your spare money. It’s also important to put money into an emergency fund so you’re prepared for any unexpected expenses that come up.
“If you don’t have a strong financial foundation in place, you need to start there,” advised Brad Ruttenberg, a certified financial planner and co-creator of The Money Twins. “Among other things, that includes an emergency fund of three to six months of your monthly needs.”
Of course, not everyone’s salary makes it easy to build a multimonth emergency fund. But setting aside even a few hundred dollars could be a big help if your car breaks down or you need to make an emergency room visit.
Stephen Nelson, who runs the personal finance blog Per Diem, recommends putting your emergency funds into a savings account so you’re not tempted to spend it. In particular, he said online banks are your best bet since their accounts come with high interest returns. Ally Bank, for instance, has a savings account with a 1.65% rate.
“This is a phenomenal place to park money you are saving,” said Nelson. “It also adds a layer of self-restraint because there aren’t any ATMs around for these accounts. You have to first transfer it to your regular bank account, which takes a few days. This allows you to think twice before dipping into your savings.”
Plus, you can set up recurring transfers between your checking and savings account so you’re building your emergency fund one week or month at a time.
3. Create a budget and stick to it
According to David Carlson, founder of one the top personal finance blogs for young people, Young Adult Money, the best step you can take in your 20s is to create and follow a budget.
“Set aside time to review your spending each month,” said Carlson. “If you don’t know how much you spend on certain categories like groceries, restaurants, or transportation, you will struggle to manage your spending.”
Carlson recommends setting a monthly target amount for each category. Then, track your spending to make sure you don’t go past your limits.
You might use a simple spreadsheet, or you could download an expense-tracking app to do the heavy lifting for you.
Apps such as Mint and YNAB will automatically track your spending and make sure you stay on course to reach your goals.
4. Avoid the trap of retail therapy
Following a budget sounds easy enough, but sticking to your spending limits is a lot harder, especially when you’re having a bad day.
Zina Kumok of Conscious Coins advises 20-somethings to not “spend their feelings.”
“Anytime I feel sad, lonely, or depressed, I somehow end up online shopping,” said Kumok. “Sometimes I’ll order a new top or nail polish color. I usually regret my purchase.”
Instead of charging your credit card, Kumok recommends finding more cost-effective ways to make yourself feel better.
“Take a nice walk, call a friend, or find an affordable therapist,” she said. “Those are cheaper and more sustainable solutions than a new dress.”
If you’re feeling down, the lift you get from retail therapy will be short-lived. And if you’re not careful, it could lead to high-interest credit card debt.
5. Start saving for retirement (yes, really)
Drew Parker, creator of The Complete Retirement Planner, said 20-somethings just starting their career probably aren’t thinking of retirement. But starting when you’re young will pay off in the long run.
“Create a written retirement plan as soon as you start working,” said Parker. “It’s not as much about retirement as it is about controlling your destiny, whatever you want that to be.”
By coming up with a plan, you can set yourself up for financial security. And if you can set aside some money each month into an individual retirement account or 401(k), you will reap the benefits of compound interest over time.
If your employer offers a 401(k) match, try to contribute enough to get the full benefit.
“A financial plan is all about what happens well before retirement so that you won’t have to worry about what will happen during retirement,” said Parker. “You may not be able to predict the future, but you can certainly prepare for it.”
6. Don’t be afraid to negotiate your salary
Although many personal finance bloggers shared tips for saving money, Catherine Agopcan, co-founder of Sisters for Financial Independence, emphasized the importance of making money.
“Don’t be afraid to negotiate [or] ask your employer for a benefit,” said Agopcan.
Learn about effective negotiation strategies before your meeting so you’re prepared when you meet with your manager or human resources. It’ll also help if you do your research on average salaries for comparable positions in your industry.
Besides negotiating your salary, consider alternative employee benefits as a way to boost your earnings, including tuition reimbursement or a gym allowance.
“Small things can add up,” said Agopcan. “It never hurts to get these extras added as part of compensation negotiation at hiring or during bonus time.”
You might have an even better chance if you’re working at a new company.
“Startups and smaller companies are constantly revamping their benefits offerings,” said Agopcan. “Give your feedback so you can take advantage of these alternative financial wins.”
Even if your company doesn’t offer specific benefits yet, it can’t hurt to ask about adding them to your contract.
7. Start a side hustle
“Instead of binge-watching the next Netflix show, find a side hustle you can make extra money with,” said Kelan Kline, who co-founded The Savvy Couple with his wife, Brittany. “Make sure it’s something you enjoy because your time should never be traded for money.”
Your side hustle could involve anything from freelancing to starting an online business to driving for Uber. But as Kline said, make sure it’s something you like so you don’t get burned out trying to balance it with your full-time job.
8. Spend less than you make
No list of financial advice would be complete without the golden rule of personal finance: Spend less than you make.
“While this advice is repeated ad nauseam, it is absolutely the bedrock to building any amount of wealth,” said Nelson.
To make sure your spending doesn’t exceed your earning, Nelson recommends setting up automatic savings.
“Each month, have part of your paycheck directed to your savings account automatically,” he suggested. “This will ensure that [you’re saving and] living below your means.”
And who knows? If you follow all the tips listed above, you might be able to live the dream and go into your 30s completely debt-free.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|2.99% – 6.44%3||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 6.43%4||Undergrad & Graduate|
|3.18% – 6.07%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of June 23, 2020. Information and rates are subject to change without notice.
2 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.19% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.43% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of June 15, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 6/15/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.19% effective June 10, 2020.