I was reading 20smoney post, Young Money: A Gameplan For Your Money As A Young Adult, and it got me thinking about my own situation and how this would be a great way to start my personal finance story on this blog.

Background:

I have been out of college for about 3 years and I have been a victim of the real world. I did not have a budget, overspent, and did not actively save money for the future. I am fortunate that I am not in too bad of shape. My main debt is the new car I should not have bought last year (Jeep Grand Cherokee). Do not get me wrong it is a great car but I would have been better to get a 2-3 year old used car and saved a ton of money.

20smoney post talked about steps to setup a gameplan for your finances. I think this an excellent strategy for someone coming out of college. So below I list the steps and tell how have I been in following them.

Step 1: Pay off your Debt

One thing I have learned over the past few months is debt is bad in soo many ways.  I wish I could tell my former self to not get into this situation. I traded a car that was around 7 years old and needed a little work for a new car that put me way into debt. I am lucky I have no school loans that most young adults have coming out of college. When you get a job it is best to live frugally and put major payments towards debt. Cause let me tell you expenses never go down. I am getting married in a year and I look at my future expenses and I wish I did better when I just started working.

Step 2 – Build an emergency fund

I did do this in my years out of college. I have about 2-3 months of expenses in my fund. It has come in handy with some unexpected expenses. You probably do not need that much in your first few years but when you settle down and start a family you really need to have a good emergency fund. In today’s world most people have to go further into debt to fix a flat tire that could happen at any time. This money should be in an emergency fund.

Step 3 – Maximize your 401K

It was unfortunate that my current company did not have a 401K for my first year as we were transitioning. But this year I have been contributing at least and most of the time more than what the company matches. This is free money!!!! I was shock last may when I found out that around 40% of the company was not putting at least the match in the 401K. Like I said this is free money. The most important time to put money for retirement is when you get out of college.

Step 4 – Open a Roth IRA

I am starting to think about doing this. I have an old 401K from a past employer sitting around that I might into a Roth IRA besides transferring it to my current 401K

Step 5 – Ramp up your income

I really have not done a good job with this. I need to find other areas to get side income

Step 6 – Choose investments for the extra money

Of Course I am not close to performing this task, it’s a goal that I might reach this before I hit 30.

As you can see from above I am not in bad shape on my way to financial stability. Many others in this country have far worse than me. But I think these are the steps that all young adults should follow so they can have that good start to their finances.

I wish young adults were required to take 1 class on financial responsibility. So many young adults are in trouble before they learn from the mistakes. This society is going down by people not saving and going further into debt.