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Personal Finance and Homeownership in Your 20s

by The Home Team of Illinois 05/10/2019

Personal financial in your twenties comes with a steep learning curve. One minute you’re studying for your finals and the next you’re expected to suddenly know about APR financing, 401(K)s, and fixed-rate mortgages.

If you’re in your twenties and are facing these new challenges, you’re probably equal parts terrified and excited for the future. And, although it can be anxiety-inducing to step into the world of personal finance, you have one tool to your advantage that your parents and grandparents didn’t have: the internet.

So, in this article, we’re going to give you some tips about buying a home and managing your finances in your twenties.

Have an emergency fund

You probably have a lot of things you want to save for. Down payments on mortgages and auto loans, saving money for traveling, beginning your retirement funds, and maybe even starting a family; they’re all important investments that will take time and financial planning to achieve.

However, one thing that many young people neglect when they first start saving is an emergency fund. There are any number of things that can throw a wrench in your plans in your twenties. You might lose a job and have to live off of savings while hunting for a new one. Maybe something goes wrong with your car and it costs hundreds to repair. Or, you could have unforeseen medical expenses that aren’t covered by your insurance. Regardless of the reason, having an emergency fund will help you stay out of unnecessary debt.

It’s recommended to have at least 6 months of living expenses saved in your emergency fund. Once you have this amount saved, it’s a good idea to keep it in a separate account to avoid spending it on things that aren’t exactly an emergency.

Don’t live above your means

We all know that buying a house, going to college, and even buying groceries are all exponentially more expensive than they used to be. However, it’s still important to try to adjust your lifestyle to the things you can afford.

This includes the vehicle you drive, the first home you buy, and even smaller purchases you make.

Avoiding lifestyle creep

Related to our last point about living above your means, lifestyle creep is the phenomenon that occurs when you get a raise or a higher paying job: the more we make, the more we spend. However, it’s possible to avoid this trend by keeping your finances in check.

The next time you get a raise, make sure that money is put to use in either your retirement fund or savings account. This method is based on the goal of “giving every dollar a job.” When every dollar you earn has a purpose, you’re less likely to spend it on new video game consoles every six months.

About the Author
Author

The Home Team of Illinois

For almost 2 decades, The Home Team of Illinois and Indiana have served the Chicago Suburbs and Indianapolis areas with their real estate needs, giving much needed expertise and knowledge in one of the biggest sales or purchases of a lifetime. In this decade alone, The Home Teams of Illinois and Indiana have been a part of over 100 Million Dollars in Real Estate transactions, serving hundreds of clients and are dedicated to serving all your Real Estate needs with excellence. Your complete satisfaction with their service, marketing and knowledge is the top priority. They have built a solid reputation of trust over the years leading to smoother transactions, referrals and repeat business.

With teams in multiple states, The Home Teams of Illinois, Indiana and Suncoast Florida specialize in Listing and Selling residential homes...and in Relocation. They understand the unique and special needs Relocation brings. Whether your move is around the corner, state to state or international, The Home Teams of Illinois, Indiana and Suncoast Florida are here to be your Relocation Experts, helping with each unique part of your relocation. Their goal to take as much detail and burden from you as possible has earned a glowing reputation over many years.

From beginning to end, and long after your sale is complete, The Home Team group of Realtors is here for you, creating lifelong relationships and friendships.

-Pam Potoczek, Wayne Laatz, Michael Potoczek, Pam Benda, Cynthia Gritton and Jody Rinehimer