As a young adult, life can be filled with exciting changes. Marriage, a new mortgage, a baby — these changes can also be overwhelming, but a solid financial foundation can help you experience them with more joy than anxiety. Below are seven steps that may help you thrive in your early earning years and beyond.

1. Create – and stick to – a budget.

If you don’t have a budget already, this is a great time to create one. A budget can help ensure you're living within your means and on track to meet your savings goals. If you find that you want or need to cut costs, consider canceling services that you don’t use regularly or buying generic instead of brand-name products. With a variety of budgeting apps available, it’s never been easier to see where all your money is going. 

2. Protect yourself.

If you haven’t already, set aside — and regularly contribute to — an emergency fund to handle unexpected expenses such as car or home appliance repair. Generally, it’s wise to keep enough to cover three to six months of living expenses, which can also carry you through an unexpected layoff or an injury that leaves you temporarily unable to generate income.  

3. Pay off your debt.

Too much debt can keep you from achieving your goals. To help you climb out of debt more quickly by paying extra each month, starting with your highest-interest, non-deductible debt like credit cards. Better yet, you could pay off your credit card bill in full every month. If you’re sticking to your budget, this should be achievable. Remember: The less you’re spending on paying down debt, the more you’ll have for saving and investing, both of which will benefit you more in the long run. 

4. Contribute to your employer’s retirement plan.

Many companies match retirement plan contributions, so setting aside at least enough to earn the full match can make a big difference in your retirement account’s growth. Ideally, you will want to put away 10%-15% of your income (including any employer match) for retirement. Since you have a longer time horizon, the money you put in your retirement account now will have even more opportunity to grow, thanks to compounding interest.  

5. Build an investment strategy around your goals.

While investing is usually synonymous with retirement, which could be a long way away, it is also a helpful tool to accomplish some of your more short-term goals such as saving for a down payment on a house. When developing your investment strategy, you'll want to consider when you'll need to access your money and your comfort with risk. An Edward Jones financial advisor can help you decide on the balance between risk and growth that’s right for you. 

6. Plan for your family’s future.

It’s very common for those who are at the beginning of their careers to also experience major life changes, such as getting married or having kids, which can greatly impact their financial futures. Here are some additional strategies for couples and families. 

Whether you’ve already walked down the aisle or are just about to do so, get on the same page as your spouse regarding your financial goals. A discussion at the beginning of your marriage, or before you say, “I do,” can prevent many financial and emotional headaches that come from having separate or competing financial priorities.

When raising children, it’s often said that the days are long but the years are short. So, while your own children may be very young or on the way, it’s never too early to start saving for their education. A 529 savings plan can help you set aside cash for your child’s education.

Estate planning
It’s important to protect your savings and the people you care for should anything happen to you. Examine your life insurance options and consider meeting with an attorney to create a will and formalize your wishes for future medical care. This way, you can make your own decisions now instead of having someone else make them for you later. 

7. Partner with a financial advisor.

Financial advisors will work with you to understand your investing goals and lifestyle. While you might be doing research on your own, a financial advisor can help you understand the broader picture and point out risks and benefits you may not know.

Katherine Tierney

Katherine Tierney is a Senior Retirement Strategist on the Client Needs Research team at Edward Jones. The Client Needs Research team develops and communicates advice and guidance for client needs, including retirement, education, preparing for the unexpected and leaving a legacy. Katherine has more than 15 years of financial services and retirement experience. She is a contributor to Edward Jones Perspectives and has been quoted in various publications.

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Meagan Dow

Meagan Dow leads the Analyst team within Edward Jones Client Needs Research. This team focuses on creating advice and guidance helping investors prepare for retirement, enjoy their retirement, save for education, plan their estates and protect their financial goals.

Meagan is a Chartered Financial Analyst and a Certified Financial PlannerTM.

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