Your twenties are an exciting time in one’s life and also an extremely important time to set the financial foundation for the rest of your life. In your 20s you must learn to transition from a lifestyle without significant responsibilities into the “real world” making your 20s a decade of tough lessons. Whether you’re on your own or still with your parents, trying to discover the best career or still in school you should look to your peers who have already been through it.

Here at Lighthouse Financial we believe this stage of your life is the “Building the Foundation” stage. Listed below we have five important ways you could help yourself build the foundation to achieve the ultimate goal of Financial Freedom sooner than later.

1) Pay Yourself First
The golden number is to try and save 10% of your annual income. One of the most important savings plans we should take advantage of are the “tax-deferred” savings plan your employer offers. Retirement may seem too far away to worry about, but the earlier you start, the better off you will be. Use the “Compound Interest Calculator” to see how much any savings each year could help you retire at the age you desire.
i. http://www.investor.gov/tools/calculators/compound-interest-calculator

2) Have an Emergency Fund
This is something people of all ages struggle with, but it’s important for individuals to understand the consequences of not having an emergency fund at a young age. A general rule of thumb is to try and have 3 to 6 months’ worth of expenses tucked away and easily available when needed.

3) Establish Credit
Building good credit in your 20s will allow you to make those bigger purchases later on in life. You should start by selecting a good credit card and focus on establishing smart credit card habits. Make sure you learn the differences between bad debt, good debt, and acceptable debt. Avoid the bad, use the acceptable debt wisely, and take advantage of the leverage of good debt.

4) Always be covered with Health Insurance
Many individuals in their 20s feel invincible when it comes to health. What they may not realize is that medical bills are one of the biggest causes of personal bankruptcy. You should take advantage of the health insurance your employer provides and if they do not offer you should take a look at https://www.healthcare.gov/ to see what kind of coverage you could afford. What many individuals do not realize is that health insurance is mandatory in the US, and individuals who choose not to have it are required to pay a fee of 2% of your annual household income or $325 per person each year. (Whichever is higher)

5) Invest in Yourself and your Career
Your career and your ability to create income is your greatest asset. In your 20s you should be more concerned with taking the job that offers you the most professional opportunity and not necessarily the highest salary. For many individuals, the biggest asset in their portfolio is their human capital. It is their ability to use their skills, experience, and talent to earn income throughout their lifetime. It is a great time to add to your resume by earning a master’s degree or taking professional certifications and training courses to broaden your professional horizons.