If you are in your 20's, it can be easy to get caught up in the fun of being young and forget about your finances. Many 20-somethings spend first and budget later and find themselves struggling to keep up with bills and rent because they are spending on other things. If this is you, you should learn some tips to help you better manage your finances in your 20's. Then, you can be sure that you are doing what is best for your financial present and future.
Get a High-Yield Savings Account
You should be saving money in your 20's just like in any other time in your life. And, you want the money that you are saving to work for you as much as possible. This is where a high-yield savings account comes in.
When it comes to personal banking, most standard savings accounts have very low APYs (annual percentage yields), which means that they will not gain you much money in interest. However, there are personal banking options in the form of high-yield savings accounts that can better benefit you. These interest rates are significantly higher than those of standard savings accounts and will help to improve upon your savings progress.
Establish an Emergency Fund
In addition to your general savings, you will want to open a personal banking account (generally a second high-yield savings account will be the best option) to set up an emergency fund. This is a savings account that you will not touch unless there is a true emergency in your life like the loss of a job, a car that needs to be repaired or replaced, or the like.
The idea behind an emergency fund is to be able to sustain and support yourself in case of an emergency situation. For example, if you get furloughed or laid off, the emergency fund can be used to pay your bills until you get back to work.
Generally, it is a good idea to have at least 6 months of bills and expenses saved up in an emergency fund. So, start setting aside money for your emergency fund right away and keep building on it every month. You can stop once you reach that 6 month threshold and put your money into your general savings if you want, or you can build your emergency fund even further.
Now that you know a few personal banking financial tips to help you in your 20's, you can get started saving money and setting up your emergency fund right away.