When you're in your early twenties, retirement appears like an issue that is a life time away. There are many other things to take into account like marriage, getting a good job and even purchasing a house. While it may seem like something that you don't have to worry about, retirement planning is actually very important for young people. If you're able to get into the habit of setting aside a certain percentage of your pay now (financial planners would suggest putting aside a minimum of 10% of your earnings) it becomes a habit that continues on over your career. Using the power of compound interest, you can build a nice nest egg by the time you retire without putting too much thought into it.

Light credit card use is one of the best way to help build your credit profile when you're young, but try not to use that as a justification to make use of plastic to buy things you can't afford. Many young adults get in serious problems with credit cards. If you decide to use credit cards, you need to use them sparingly. Credit cards are really easy to use to make purchases (studies show people spend more when they use a card than when they pay for something with cash), and you may be influenced to purchase everything you want until you reach your limit. This is often a magic formula to financial ruin, and it could take you years to pay off the debt.


Begin to build a crisis fund at the earliest opportunity. An emergency fund is an amount of cash that you set aside to assist you with unforeseen expenses. Establishing a goal of saving 3 to 6 months of expenses in your family savings would be highly recommended. This way, if you ever lose your job or face some other type of serious emergency in the future, you'll have enough money set aside to weather the storm.


If you're interested in eventually buying a property, you might want to begin saving for a down payment now. While you may potentially purchase a home with very little money down, it may hurt you over time. If you fail to put 20 percent down on the house, you'll have to pay private mortgage insurance, which unfortunately adds money to your monthly payment. If you don't have any equity inside your home, it can trap you in the property for countless years if property values drop.