Financial Planning By The Decades: When You Are 20
BOSTON (CBS) - A couple of months ago five books arrived for me written by Peter Dunn. Part of a series, Your Money Life: Your 20s right thru ":Your 60s".
These books are simple, easy to understand, and after reading them I think worth owning. In the back of each book in the series is a list of goals for that particular decade to get you to your next birthday with a zero in it.
Let's start with millennials, these are the Americans ages 18-29. They are today's twenty-year-olds. Hopefully they have a job and are not underemployed during the first decade of their working career.
What should you accomplish in your 20s before your 30th birthday is the theme of the first book in the series. The author infers lots of "shoulds" in the books. This is not a bad thing. Your parents have been doing it for years.
Each book has the same format but the advice is different for each decade. You start out with Chapter 1, The Path. Here you are setting up your financial plan. In Chapter 2, you review your debt, Chapter 3 is all about spending, Chapter 4 is about budgeting, Chapter 5 is all about making those major purchases, Chapter 6 focuses on Credit, in Chapter 7 you review saving and investing, Chapter 8, insurance and the last Chapter, number 9, your goals to have reached by your 30th birthday.
So by 30 the author suggests the following:
- You should be free of student loan debt
- You should have an emergency fund with at least 3 months of living expenses in it
- You should be contributing at least 10% of your gross income going toward your company sponsored retirement plan
- There should be no car payment
- If you plan to be a homeowner begin saving for a down payment,
- If you are in a committed relationship in which your significant other relies on your income, you need 10 times your income in life insurance
One more thing: Great website for help keeping track of your finances and budget is www.mint.com .