Young Adults in Their 20’s

credit-counseling-certificatesAs a group, young adults face several unique financial challenges, including excessive student loan debts, high car insurance rates, trying to save enough to purchase a car or a home, and fairly high credit card interest rates. Individually, young adults often have little or no savings accounts, are contributing only minimally to their retirement accounts, often carry high credit card debt from month to month, are more likely to use rent-to-own stores to purchase electronics and furniture, and may struggle to pay utilities, cell phones, Internet, and other monthly bills on time.

While these challenges may create fear in the hearts of many young adults, you should not despair. Building good and healthy habits for life are what our 20s are all about. Set and post goals that will motivate you to build wealth and limit frivolous spending. If you make a financial mistake, you have time to recover.


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Unfortunately, many young adults who have had trouble with debt quickly swear it off “forever,” not realizing that there are different types of debts: Potentially good debts (home, student, or business loans), Practical debts (credit card debt that is fully paid off monthly) and Bad debts (everything else). Avoid the bad debt, minimize the practical debt, and approach the potentially good debts with good sense and after lots of homework.


What are the keys to financial success in your twenties? SIMPLE:

  • Spend your money according to a plan (create and pay attention to your household budget while also developing a disciplined approach to your purchases)
  • Invest in yourself and your future (get an education and contribute to your retirement account)
  • Manage (build your credit wisely and slowly by using credit cards for purchases that do not involve consumer decision, such as utilities or cell phone plans, and not for groceries, dining out, travel, and retail store purchases)
  • Plan (build savings for emergencies and short-term expenses)
  • Limit (make sure you have sufficient insurance coverage for your health, your vehicle, your apartment/home, and, if you have dependents, your life)
  • Eliminate (pay off your debts in full as soon as possible)

When it comes to debt, student loans seem to preoccupy many young adults, more so than other types of debts. If you have trouble paying your student loan debts on time, contact your lender directly to determine what options they have for you. Do not automatically jump at opportunities to lower your monthly payment or move your loan into forbearance, since both of these options usually mean that you will end up paying more interest over the life of your loan. If you struggle with your lender, consider contacting a student loan counseling organization like Debt Reduction Services Inc. Keep in mind that third-party counselors like us will charge a reasonable fee, though you want to avoid anyone who solicits you through email or telephone, who will not disclose their fees up front, or who charges a thousand dollars or more for their services.