Hello 20-somethings! This is an exciting yet frustrating time for you. You’re probably done school and thought by now you’d have some resemblance of a life plan. Or, maybe you didn’t go to school and want to travel and see the world, but your bank account says otherwise. No matter where you are in your 20-something journey this is the time to set up your financial foundation. Let’s talk tackling those annoying student loans.
Student loans are a blessing and a curse. Even though you may be starving, you always seem to find $20 for the bar. In the moment, this seems like free money. But then you graduate and you get your first letter about payments. And you think, “ Well, social life, it was nice knowing you, because I am going to be BROKE FOREVER.”
You’re not alone. If you’re the average four-year degree student and had approximately $22,000 of OSAP loans for each year, then you’re looking at around $88,000 worth of loans.
You can see why it’s important to think of your game plan. More than ever, it’s important to learn the fine art of budgeting. This was one of our first posts on this blog and we encourage you to go back and read how to do this. You want to try and pay this down quickly, as it will affect your ability to apply for a mortgage and other credit down the road.
Speaking of credit, it is SUPER IMPORTANT to get this shit figured out NOW! If you want to do anything (rent an apartment on your own, lease a car, mortgage, bank loan) you need to have good credit. You also need to figure out your credit score. Don’t know how to? You can go to your bank and ask them to get your credit score. If you want a full credit report, you can order those online. For more info about credit scores and reports, view this helpful article.
Now that you’re figuring out how to pay your loans, budgeting and credit scores its time to focus on savings. If you’re able to, you should put about 10% of your income into savings. Not sure if you can do this? Take a look at an older post of how to get your financial house in order and review how to organize your finances. Why is saving money early so important? Take a look at this Business Insider article about how saving money is a learned skill.
All of this is fine and good, but what’s the point if you’re not working towards something? You need to be rewarded for this hard work! Do you love to travel? Want to live downtown? Want to volunteer overseas? You can achieve these dreams, but you need to set goals to get there. Think of the type of life you want and the steps you need to take to get there.
Your take-away from this post should be the importance of knowing your money. Know how much debt you have and how this can affect your credit. Learn how to save to achieve your goals. Next week, we focus on the 30-somethings. Thanks for reading!