Financial Planning By The Decades: When You Are 20
BOSTON (CBS) - Last year I reviewed a series of books written by financial author Peter Dunn, Your Money Life: Your 20s through your 60s.
The books are easy reading. 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 born between 1980 and 2000. They are today's twenty-year-olds. Hopefully they have a job and are not underemployed during the first decade of their working career.
This particular generation is larger than the baby boomers. And according to a recent Bankrate survey has nailed saving. Millennials are the most comfortable of the generations with their savings, debt, net worth and overall financial health.
So what should a 20-year-old accomplish before their 30th birthday? 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. Then you review your debt, Chapter 3 is all about spending, then you take on budgeting, Chapter 5 is all about making those major purchases, following that the next chapter focuses on credit, then you review saving and investing, next is learning how to use insurance and the last Chapter, the suggested goals to have reached by your 30th birthday.
So by 30 the author suggests the following:
- You want to be free of student loan debt which is a big order.
- You want to have an emergency fund with at least 3 months of living expenses
- You want to be contributing at least 10% of your income to a 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.
