As a society, we’re programmed not to talk about money. As a result, it’s hard to get a feel for what types of financial milestones are important in your 20’s and 30’s. Combine that with the fact that people tend to only talk about the good stuff on social media, and you’ve got entire swaths of people who all feel like they’re falling behind financially, with no idea how to fix it.

Maybe that’s why the biggest question I get from clients and friends is, “how do I know whether I’m on track?” To try and tackle this question, I’ve made a list of the top ten things that I believe young people should focus on when it comes to their finances!

  1. Know how much you’re spending.

When it comes to personal finance, there is nothing more fundamental than making a budget. This means you should know how much you’re earning, how much you’re spending, and how much is leftover for saving and investing. If you don’t know this information, it’s exceptionally hard to make an informed decision about how to handle the rest of your finances.

“But wait!” you say. “I hate budgeting!”

Me too, friend-o. When done the wrong way, it’s pretty much the worst. Luckily, there is a vast array of budget types out there, from typical spreadsheet number crunchin’, to systems that simply attempt to impose some minor order on your chaos. For a list of these budget types and how to figure out which technique might be right for you, check out our sweet budget style quiz.

  1. Save $1000 in an emergency fund.

A typical emergency fund requires 3-6 months’ of expenses, but saving just a thousand dollars is an important first step to a full emergency fund. Why? Well, when you’re living paycheck to paycheck, it’s damn hard to focus on your other financial goals. For instance, you might throw all your money towards paying down credit cards, only to find that when things get tough or you have an unexpected expense, you’re having to whip out the card again instead of paying cash. Likewise, you might find yourself getting hit with overdraft charges right at the time when you need that money the most.

Taking the time to set aside $1000 for emergencies will not only give you a financial buffer for unexpected issues, it will also give you some vital practice with saving your money. This way, when your income increases down the road, you’ve already started to hone your delayed gratification skills.

  1. Know what all your debts are and have a clear plan to pay them down.

Once you know where your money is going and you’ve got a basic emergency fund set up, it’s time to focus on debt. For some people, the hardest part is simply figuring out what you owe and to whom. When you’re in debt, its stressful. You feel guilt. You don’t want to open those credit card statements to see what the damage is. But the more you put it off, the harder it will be to take control again.

To start, make a list of all your sources of debt: mortgage, student loans, car loans, credit cards, department store cards, EVERYTHING. For each type of debt, look up the balance, payment address, payment amounts, due date, and interest rate. Having this information all in one place might not be fun to look at, but you should feel proud of yourself for having done A Very Hard Thing.

Once you have your list of debts, you can make a plan to pay them down. There are many schools of thought on how to approach this. Traditional finance dictates that you should make the minimum payment on all your debts, then throw any additional money to those debts with the highest interest rate first. For example, if you’ve got $200/month to put towards debt after your minimum payments, don’t pay off your mortgage first—instead, pay off that high interest rate credit card debt as fast as you can to save on interest.

Alternatively, some financial professionals prefer Dave Ramsay’s debt snowball approach. With this approach, rank your debts from lowest to highest remaining balance, then pay off the smallest debt first. Once you’ve done that, take the payment you put towards the smallest debt and add that amount to the next smallest debt. Continue that process until you’re paying only the largest amount of debt first, with a payment amount equal to all the payments of the debts that came before it.

Theoretically, paying down the highest interest rate debt first is the method that minimizes overall interest payments, though some prefer Dave Ramsay’s approach because paying smaller payments first may create a sense of momentum. Either way, pick a plan that’s right for you and get started!

  1. Start saving for retirement

It’s easy to put off retirement since it’s so far away. We as humans are not very good at delaying gratification, so if we know something is far off, we prioritize the impending stuff first. However, getting started early with retirement saving is critical, even if you’ve got a lot of other financial stuff going on. Trust me, your future self will thank you.

If you have the good fortune of working for an employer who offers a company retirement plan such as a 401(k), make sure you’re taking advantage of that opportunity. When an employer offers a 401(k), they are legally required to help you save for retirement. They can choose to either put money in on behalf of all plan participants (this is known as a Safe Harbor 401(k)), usually between 2% and 4% of your annual salary, or they can match your contributions up to a certain percent.

What this means is that first and foremost, if you have an employer plan, you should be putting in enough money to get the full employer match. Anything less than that and you’re leaving money on the table.

If you don’t have a retirement plan through your employer, you can also open an individual retirement account (IRA) or a Roth IRA to save on your own. I’m a fan of the Roth IRA (read more about that here!), but regardless of which you choose, save early and save often.

  1. Build up a fully-funded emergency fund

Previously, we talked about the importance of creating a starter emergency fund with $1000 in it. Now, let’s step it up and turn it into a fully-funded emergency fund. What do we mean by fully-funded? Well, this means having 3-6 months of necessary expenses in a separate savings account.

To figure out your monthly necessary expenses, simply make a list of everything you’d need to survive for a month, along with any other monthly payments you’re committed to. This includes staples such as rent/mortgage, gas, groceries, utilities, etc. It also includes minimum payments on debt such as car payments and student loans, minimum credit card payments, and any monthly fees that you’re locked into with a contract. It wouldn’t hurt to include a little spending money each month as well, just in case. Add all those things up, and you’ve got an estimate of how much money you’d need to scrape by for a month in case of emergency.

Whether you’ll need three months or six months of expenses will depend on your occupation, industry, job security, etc. For people with variable income or who are looking to change jobs, more is better. For people with highly predictable income and who are comfortable with their established career, three months’ worth might be sufficient.

Finally, make sure that this money is in a separately labelled savings account so that you’re not tempted to spend it on the fun stuff. Life is full of curveballs, so the last thing you want is to blow your whole fund on a vacation only to come back and realize you’ve lost your job.

  1. Set other savings goals and make a plan to reach them.

Building your emergency fund is likely to be your most impending savings goal, but there are plenty of others that you’ll want to focus on, depending on your priorities and interests. For some people, this might mean buying a new car or your first house. For others, this might be a vacation, home repairs, starting a business, or paying for your children’s education. Everyone is different—which is why this article doesn’t have “buying a house” on the top ten list!

When it comes to setting goals, we like to recommend setting S.M.A.R.T goals: goals that are specific, measurable, achievable, relevant, and timely. This means you need more than just a vague idea of what to accomplish; you need to identify what you’re saving for, how much money you need, when you need it by, and a monthly amount to set aside to make sure you’re staying on track.

Setting S.M.A.R.T. financial goals is such an important and in-depth process that we’ve devoted a whole blog post on it, so be sure to check it out on our website. As a bonus, the post contains a couple of free templates that will help you get organized!

  1. Know your credit score and find ways to build it up.

If you’ve got goals on your list such as buying a car or a house, you’re likely going to need to take out debt, and for that, you need a good credit score. In a nutshell, a credit score is a rating of how likely you are to be able to pay back your debt, with scores ranging from 300 to 850. When it comes to your credit score, the higher the better, because a high credit score means that lenders will be willing to give you more favorable interest rates on your loans. That said, a score above 700 is generally considered “good.”

Your credit score takes into account a number of factors, including but not limited to:

  • Age of credit and types of credit
  • Total debt
  • Payment history, including the quantity and severity of late payments
  • Your available credit vs. how much you’re actually using (Credit utilization rate)
  • Number of inquiries for your credit report

There are three official credit reporting bureaus: Experian, TransUnion, and Equifax. The US government guarantees you one free credit report for each of these reporting agencies per year, if you want to know your official score. Just be careful—pulling your credit too much can ding your credit score!

There are also some good resources that will give you an estimated credit score: Credit Sesame and Credit Karma, to name a couple. The downside to these is that they’re not guaranteed to be completely accurate. However, there’s no penalty to accessing them, so if you’re trying to build your credit and want more frequent updates on your progress, they can be useful nonetheless. As an added bonus, Credit Sesame and CreditKarma will help break down ways to improve your credit over time, which can make a big difference in your interest rates down the line.

  1. Invest in yourself.

Up until this point we’ve talked primarily about where your money goes: spending, saving, and investing for the future. What we haven’t yet discussed is what money is coming in, which is largely a function of your job or career.

If you’re happy with your job, good for you! Now think of ways to keep moving on up. If you’ve been there a long time without any sort of raise or bonus, it might be time to respectfully raise the issue of a pay increase to reward your skills and longevity. It is also a worthy exercise to examine ways that you can improve your job performance, with an eye towards a raise or promotion. Be sure to set S.M.A.R.T. career goals that help you get to where you want to be next year, 5 years from now, or even further down the line.

If you don’t yet feel established in your career or you dislike your current job, don’t worry. You’re not alone there, and it can take a long time to find the right position for you. That said, you can start by doing some soul searching about your current employment. Think about what you like and dislike about it, as well as explore options that might be more enjoyable or more lucrative. From there, the usual career-building rules apply: create a killer resume, start networking with people who might can find you a better position, and don’t be afraid to apply to jobs that might suit you.

Either way, it’s never too early to start thinking about how your career impacts your personal financial situation.

  1. Get the insurance you need to protect the things you value.

For many of us, auto insurance is a given, while good health insurance feels like a gosh darn luxury. In addition to these two common forms of insurance, there are a number of others that might be relevant to your situation:

  • Dental and vision insurance – Supplementary forms of health insurance specifically geared towards those with a likelihood of dental or ocular issues.
  • Disability insurance – Provides a temporary source of income if you are injured or rendered unable to work.
  • Home/Renter’s insurance – Protects your owned or rented property from fire, theft, vandalism, etc.
  • Life insurance – Protects your loved ones in the event that you die early. If a partner and/or children are dependent on your income to survive, you need life insurance.
  • Flood/tornado insurance – Provides additional protection against one-off, catastrophic, weather-related events.
  • Personal property/collectibles insurance – Designed for people who have valuables that run the risk of being damaged or stolen.
  • Travel insurance – Typically comes in the form of one-off protection against delay and cancellation of a trip, or health issues that arise from or during travel.

You might not need them all, but it’s a wise choice to review this list, think about which of these might be most applicable to you, and act accordingly.

  1. Create a will.

It feels morbid to think about death this early in life, but it’s one of those inevitabilities that you’ll have to face sooner or later. Moreover, I can think of plenty of horror stories of people who died without having their affairs in order, leaving their loved ones in the unfortunate position of figuring out what to do when you’re gone.

If you’ve got children or an actual estate, I’d highly recommend seeing an attorney to help you get everything down on paper. Even if you’re not quite ready for full-blown estate planning, here are a couple of things to think about to get you started:

  • Select your beneficiaries – who gets all your money and your stuff? If you have retirement accounts or investment accounts, you should designate beneficiaries for each specific account.
  • Choose the executor of your will – who oversees making sure your wishes get carried out when you pass away? I’d also recommend you think about whether you want to compensate them. If so, be sure to specify a payment in your will as well.
  • Choose a guardian for your children – who will take care of your kids when you die? This is a big decision, not one to be taken lightly. And in addition to naming this guardian, you might do well to discuss this with them so they understand your intent and any wishes you might have should this become necessary.
  • Identify any important possessions and who they go to – Do you have a sweet car? A signed picture of President Obama? A ring belonging to your great-great-grandmother? Be sure to make a list of those belongings and their future recipients.
  • Do the minimum to make it legal and usable – Find 2-3 witnesses to sign your will, make sure it’s in a safe place and that the executor knows how to get to it, and that you periodically update it as your situation changes.


There are numerous financial considerations out there, even for young people, but getting started early can help. The process might be a little stressful—but it tackling even a few of the items on this list will be well worth your time!

Feeling overwhelmed? Not sure how to get started? Too busy to handle your own finances? I would love to speak to you about how Young + Scrappy can help. Schedule your free, 15-minute introductory appointment call here!


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