By 25 years old, you should have some grasp of how to take care of your finances as you begin your career. You should know: 1. The three basics of a solid financial foundation Credit card debt paid off, emergency fundstocked up, and retirement account(s) in existenceand growing. Everything else (travel, homeownership, investments) should come after. 2. How to create a budget Because without one, you may not reach any of your goals, like buying a home, paying off your credit card debt or traveling the world. 3. How much you make and how much you spend each month It sounds like a no-brainer, right? Some people, however, are caught off-guard and find out the hard-way that their expenses are more than their income. 4. How to get out of debt
If not, it’s time to make a plan.
5. Your credit score
Still not familiar with this number? Afraid to look even? Your credit scoredetermines not only what kind of credit cards you’ll get approved for but also how expensive your mortgage and car loan would be.
6. It can take a long time to save up a down payment
When it comes to buying a house, “People always say, ‘Get in as soon as you can,’ and ‘It’s OK to be house poor.’ But before buying a house, you should be financially stable. If that’s not until your 30s or 40s, that’s okay.
7. How to build a financial emergency
Financial emergencies do not include those concert tickets you “have to have” or that emergency shopping trip for your best friend’s wedding. These are optional (even if they don’t feel like it).
8. What your ideal retirement will cost
Have you everreallycrunched the numbers? However, if you start at 25 (or earlier), you’ll have an easier time making sure you have enough money to retire. A good tip is to contribute the maximum amount to your 401k if your employer will match the amount.
9. That, the older you get, the more complex your money life becomes
10. The basics of investing
Don’t eventhinkabout investing until youhave a fully funded emergency savings account and no high-interest debt.
11. Your total compensation package
Does your employer offer disability insurance? Life insurance? Health benefits?
12. Don’t rely on your parents for taking care of your finances
13. That it’s possible to juggle a couple of money goals at once
14. That you will never have “enough” money to do it all (unless you are Bill Gates or Elon Musk)
15. That you never know the truth about other people’s finances
The co-worker with great clothes could be deep in debt orhave family money.The neighbor could be close to foreclosure or have paid cash for her house. That’s why it’s never wise to compare yourself toother people.
16. What not to do when you buy a new home
We all love to renovate. But remember: You’re not on an episode of one of those D.I.Y. extreme home makeover shows and, in real life, big projects cost big bucks. So don’t let your aspirations do you in.
17. How to find a financial planner you trust
18. How to dress fabulously onyourbudget
19. What “rebalancing” means
When you were 10, it meant climbing back up on the balance bar in gymnastics class.Now, it may mean making sure your investment portfolio is primed to grow, while also protecting yourself so your accounts won’t be decimated if there’s a stock market downturn.
20. Keep your receipts for your taxes
Some of your purchases may be tax-deductible, meaning you’ll get this money back later on. It is now your responsibility to keep your finances and purchases in order. Start getting organized!
21. The big cost of your little splurges
You should now know that your daily Starbucks runs might be hurting your budget.
22. Organize your key financial documents
You should be well aware where your birth certificate, social security cards and other official IDs are, not your parents.
23. How taxes factor into your retirement plan
Some retirement savings vehicles have you pay taxes now and are tax-free later. Some are tax-free now but charge you tax when you withdraw funds.
24. That cashing out your 401(k) may hurt you. Nowandlater
You already know thatpulling money out of your 401(k) sets you backyears and years when it comes to retiring, right? But guess what: You’ll also have a huge tax bill to pay the next April.
25. The ins and outs of interest
Simple interest is a percentage multiplied by the amount and the length of time you promise to pay it back Compound interest, on the other hand, is calculated more frequently so that it builds upon itself to make interest grow continually.
Source: LearnVest
