If you consider yourself a young professional, it’s imperative to take decisive action about the state of your finances. Far too many people under the age of 40 neglect to make the right money moves. Later, they regret the fact that they could have or should have done one thing or another. What are some of those decisions that you can make now and never worry about regretting them? Refinancing student loans is one.
Others include incredibly important but relatively simple steps like setting up an automated savings plan, creating a detailed monthly budget, making a plan to acquire a first home, and setting up an investment account with an online broker. There are other items on a similar list, but those are among the most helpful decisions any young person can make before they reach middle age. Consider the following suggestions as you create a personalized plan of financial action.
Refinance Your School Loans
There’s probably no more advantageous financial maneuver than refinancing your existing student loans. When people choose to refinance education debt, they do so for most of the same reasons. In addition to getting a single monthly payment that can be much lower than for the original loans combined, borrowers usually enjoy more advantageous terms like longer repayment periods and favorable interest rates. Note that a refi gives you the opportunity to turn one or more old loans into a fresh obligation that comes with just one payment, not several.
Get Serious About Saving
If you want to take advantage of investment opportunities down the line, now is the time to set up an automated savings plan through an employer or bank. By making the contributions a direct deposit into a savings account, you won’t miss the money as much and will get into the saving habit much faster. Don’t worry, at this stage of your career, about the amount you put aside from each paycheck. Instead, focus on setting a low, one-digit percentage of all income that goes directly into your savings account. Many people start with 5% and adjust up or down depending on how much room they have in the monthly budget.
Create a Realistic Monthly Budget
The central point of focus should be your monthly budget. Make it as detailed as possible, and don’t be afraid to adjust various categories as the first few months pass. But once you get to a point where the numbers work, don’t make any changes for about six months. Developing a realistic budget is an essential part of the entire endeavor. List every area of expense and income, being careful to track spending for at least a month before attempting to compose the final version of the budget.
Make a Home Buying Plan
Whether you are 22 or 32, if you have never purchased a home, create a written financial plan for the purpose. Spend time researching the housing market, but remember that prices can change a lot in the span of just a few years. In any case, make rough estimates about purchase prices, what your future income will be, and how much you could put aside per month to save for a down payment.
