Financial stress affects all kinds of people. For those emerging adults between the ages of 20 and 30, the stresses of finances can become overwhelming.
According to the Financial Finesse “2013 Financial Stress Research” report, about 62% of survey respondents under 30 admit to having “some” financial stress, and 15% report that they have a “high level” of stress.
There are plenty of helpful tips that adults under 30 can utilize to improve their financial situation in the present and for the future.
Many financial planners recommend that, starting in your twenties, you should begin saving between 10 and 20% of your entire income for your retirement. A successful budgeting method that can assist in your savings is the 50/20/30 method:
50% of your paycheck should go towards essentials like rent, utilities, groceries, and transportation.
20% of your paycheck should be saved for your retirement, for paying off debt, and as emergency savings.
30% of your paycheck can then be used for various lifestyle expenses, like vacations, dining out, and shopping.
Paying off your debt is extremely important so it doesn’t continue to negatively affect you later in life. The longer you wait to to pay off your debt, the more you’ll end up spending. The average household pays a total of $6,658 in interest every year. That’s 9% of the entire average household income ($75,591) being spent on just interest. The average household in the U.S. carries $15,335 in credit card debt and about $129,579 in total debt.
Accumulating enough money for your retirement seems like a difficult task. The Consumer Federation of America determined that if you save $50 a week for 40 years, you will end up saving $332,020. You’ll save that much even if you invested only 5% per year. Doing this can throw off $16,601 in interest every year with you not having to do anything.
Struggling with your finances while still planning for the future can be difficult, but doing the research and being responsible with your money can help.