7 money moves you should make before you turn 25

Even if math isn't your thing, it's important to figure out exactly what you're spending every month.

Add up all the money you have coming in -- generally, that's your paycheck. Then subtract what you regularly spend. If you're not disciplined enough to write down all your purchases, ditch the cash for a month and use a debit or credit card to get an electronic record of all your spending. Just keep in mind: people tend to spend more when swiping plastic.

If the result of your calculation is positive, consider putting the difference into savings. But if you're spending more than you're taking in, it's time to cut back.

When it comes to saving, aim at socking away 20% of your income, suggested Tana Gildea, a certified financial planner and author of The Graduate's Guide to Money.

Half should go into what she called a "short-term freedom fund" and the rest is for long-term goals and retirement. The freedom fund will make unexpected expenses manageable.

"If you can consistently set your life to be able to save 20% in total, you are getting a firm foundation for your financial security," said Gildea.

If 20% feels like too much, start out small, but increase the amount every year.

It doesn't matter if you're a spender or a saver. In order to budget better, you need to get to the core of what drives your financial decisions.

Your relationship with money often stems from your childhood and how your parents approached and talked about finances, according to Gildea.

"You need to know what you believe about money, what are the emotional anchors and what could impede your ability to make good money decisions."

It's tempting to avoid the doctor's office when you're young, healthy and financially strapped. But health insurance is not the place to cut back.

The Affordable Care Act requires everyone to have health insurance. Bonus: it also allows young adults to stay on their parents' plan until 26.

Once it's time to get your own plan -- whether on your own or through your employer -- review the options and find one that best meets your needs. Signing up for the wrong plan can cost you a bundle in extra coverage you might not need or leave you with huge medical bills.

"For a lot of younger people, high-deductible plans can make more sense, assuming you are in an overall healthy state," said Jared Snider, wealth advisor at Exencial Wealth Advisors in Oklahoma City.

With the average student loan debt load coming in around $35,000 for the Class of 2015, getting a handle on re-payments can help shed your debt faster.

Figure out what you're options are and the compare long-term implications of different plans. For instance, extending your payback plan may reduce monthly payments, but you'll end up paying more in interest.

Some lenders allow you to consolidate loans and lock in rates.

You'll probably be working another 25 years before retirement even seems possible, but now is the time to start saving. Why? With so much time to grow, even small amounts of money you sock away in your 20s can add up to huge sums by your 60s.

Start putting money into a retirement plan, like a 401(k) or IRA. Have the funds automatically withdrawn from your paycheck, the experts recommended, and if your employer matches contributions, take full advantage.

Not sure how to invest it? When choosing funds, there's no need to look for income-producing investments at age 25, said Adelina Kieffer, senior vice president at Bryn Mawr Trust. "You are looking for growth, which would be stock funds -- 70% in stocks or even 80%, depending on your risk tolerance."

Whether you want to retire early, travel the world or buy a house, your life goals need to be financed. And knowing what you're working for can keep you motivated and on track.

Even small purchases like your daily caffeine fix or last-minute additions in the check-out line add up.

That's why Gildea recommends using a credit card for must-have purchases like gas and groceries, and using a pre-determined amount of cash for the rest of your weekly spending.

"You know right where you are, it's easier to keep up [with cash]; we can't manage virtual payments very well."


Autor: Kathryn Vasel

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