Financial Milestones You Should Be Starting In Your Early 20s

An individual's early 20s is a hectic time of life, especially nowadays. Finishing school, moving out on your own for the first time, working your first "real" job, and maybe even moving across the country all take a lot of time and energy, not to mention money. In today's world of a high urban cost of living, student loans, and pressure to acquire the latest tech, just keeping up can break almost any budget. This can make good financial planning difficult; however, your early 20s is the best time to get control of your financial future. By starting the right habits now, you can give your finances time to grow, and leave yourself in a strong position for your 30s and beyond. By hitting these milestones, you set yourself up for success.

Build An Emergency Fund

A whopping twenty-eight percent of Americans have no emergency savings, and for those in their early 20s, the percentage is much higher because they have had limited time to save. Emergency savings serve as the backbone of your finances and allow you to move through life without financial disruptions. Most financial experts consider an emergency fund indispensable because it covers life's unexpected expenses, especially the ones that cost you more than a single pay check can handle. These unexpected expenses tend to come in one big chunk, such as a car repair bill of 1,500 dollars. Few people have 1,500 dollars left from their pay checks after paying bills.

Generally, this means one of three things: the 1,500 dollars comes from emergency savings, is borrowed (often at high interest), or the car remains inoperable. Having the cash is always king and debt is the enemy of any solid financial plan. Experts recommend saving at least three months salary, but don't stop there, because if a bad recession strikes, you may face long-term unemployment. Your early 20s is the best time to build an emergency fund because expenses tend to be lower than later in life, especially if you are single. If you're still living at home, take advantage of the opportunity to save!

Continue reading to learn how budgeting is a critical skill to learn.