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5 things to do with your money if you’re a woman in your 20s

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The twenties are both thrilling and frustrating. You’re probably growing your network, your career, and taking risks. The other hand, you might be trying to navigate workplace politics or earning a little extra money so that all your financial requirements are met. Most likely you are wondering about what to do now in order to prepare financially for the future.

You should also be focusing on your long-term goals, especially if you’re female.

Many reasons women should be active in managing their financial affairs include: building wealth. First, on average women live longer lives than men. Therefore, you will require more money. saved for retirement. However, September 2021 report from the U.S. Bureau of Labor Statistics highlights that women who work full-time still earn 82% of what men who also work full-time earn — in other words, women earn 82 cents for every dollar that a man makes; it’s even lower for women of color.

Young women should take steps to increase their financial security. Jill Gianola was my interviewee, as well Margaret Price (co-authors) of “The Book.”Single Women and Money: How to Live Well on Your Income To learn their top financial tips for women in their twenties, click here

Gianola explains that while your twenties are exciting because of the fact you’re just starting out in your career, you have to also deal with loans and other debt. He says that you need to figure out ways you can save money when your salary isn’t quite as high as you expected.

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1. Benefits offered by your employer

It can often feel like you have so many financial obligations and goals to work toward all at once — especially if you struggle to cover all your expenses. You can ease some of the pressure by taking a look at the benefits offered by your employer.

Health insurance can be costly if you sign up for a plan on your own — on average, health insurance costs $456 per monthIndividuals: $1,152/month for families; and 1 1,152/month for couples. Enrolling in employer-sponsored health insurance can help lower this cost. Employees will typically pay approximately $105 per month for health insurance when they enroll through their employer — and the money automatically comes out of your paycheck so you’re less likely to miss it.

A common employer benefit is the a 401(k) planOr 403(b). You can make a contribution to a retirement fund through your employer. The money goes into mutual funds, target date funds or other assets.

Some will. automaticallyEnroll full-time workers in 401 (k) plans. You can check with HR if the plan you have is available. It is important to ensure you contribute enough money each paycheck so that your wages are paid. employer’s match. Your employer will also contribute to your retirement savings. This could help you increase your account’s growth much quicker. You’re effectively wasting money if you don’t meet the match.

Numerous companies offer various reimbursement options for employees. These include discounts on services such as financial planning, fitness center, and coursework. Not all employers offer such benefits, but it doesn’t hurt to ask — and if you find out that yours does, this could save you some money each month.

2. Make sure you have an emergency fund

Nearly every financial expert will tell young people that they should use some portion of their pay to get started. building an emergency fundPrice and Gianola are in agreement. You can use your emergency fund to provide you with an extra cushion and money for unexpected costs.

Even though some expenses might end up being more costly than what you have saved, any money that you do save will allow you not to get into further debt.

A good idea is to have an emergency fund. high-yield savings accountThis account is separate from all your savings and checking. A high-yield savings account — like the Marcus by Goldman Sachs Online Savings AccountOder the Ally Online Savings Account — allows you to earn interest on your balance so you can grow your money a little faster.

3. Be sure to prioritize your necessities, while making space for what you really enjoy.

Savings are under tremendous pressure. invest your moneyAll your expenses, such as rent and food, will be covered. Sometimes managing your finances can feel overwhelming. To avoid feeling tired, you should also use your money to support the things that are most important to you.

Gianola states that understanding your income, expenses and how you prioritize them is one of our main topics. He also explains how to make sure money to spend on things that are important. “Otherwise, it’s like going on a diet and saying you’ll never eat another dessert again — you’ll never stick to it.”  

Start by taking a look at your expensesYou can use a budgeting program like MintOder Personal Capital) and identifying anything you’re currently spending money on but not actually using or enjoying — like subscriptions you forgot about or a gym membership you don’t use. By doing so, you will maximize your money for items that you truly enjoy.

4. How to get tax credits for cost savings

One interesting fact we discovered is that most women in their twenties do not know how to use a bathroom. tax creditsPrice states that people should reduce their spending. There are many tax deductions and credits available, including the lifetime earning credit and the child credit. Also, there is an earned income credit for those with low income and childless.

Tax creditsYou can reduce how much money you owe. If you have $500 in tax owing but receive $500 tax credits, your tax liability will drop to 0. Or, let’s say you owe $500 in taxes but receive a $1,000 tax credit — you’ll actually end up with a $500 tax refund. This money could be used to increase savings or put into a retirement fund.

You can get many types of tax credit. You can claim, for example: California residentsRenters can get a tax credit for paying rent if their income is below a specific level. H&R BlockThis list includes a few other tax credits for young people. These include an education credit, if you are paying tuition as a student, and a credit towards charitable donations. Tax credits are generally claimed when you file your taxes.

5. Pay off your debts and save for retirement.

It is often a matter of debate whether priority should be given to certain items. paying down debt or investingGianola advises putting your future first. However, Gianola also recommends having both.

She said, “I like to make progress towards multiple goals at the same time.” The dollars that you invest in a charity are the best. Roth IRABecause they have the longest potential to grow, 401(k) and IRA are today the most important dollars you have in your retirement savings. So start saving for retirement as soon as you get a job — even if it’s just $10 or $15 dollars a month. However, you should have a strategy for paying off your debt.

Price also suggested tackling higher interest debt — like credit card debt — first since the longer you carry a balance on this debt, the more you’ll end up paying in interest charges. It’s possible to get rid of high interest debt and make extra money that can be used for investment or other debts.

The bottom line

Note from the Editor: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.



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