Personal finance for 20-somethings: 8 steps to make the most of your money before you turn 30


Louisville, KY—June 8, 2016—It’s easy for young adults just beginning life on their own to feel overwhelmed by all the financial responsibilities bearing down on them. In addition to the big ticket items like housing and healthcare, there are the daily expenses. “It’s difficult to think about saving money for emergencies, the future and retirement when you’re holding a large amount of student debt and living paycheck to paycheck, but that’s no excuse for not saving,” said Carla Dearing, CEO of SUM180, an online financial planning service created by women for women.

“As difficult as it may seem, it’s never too early to start saving for the future. The sooner 20-somethings begin putting in place the elements for financial stability, the sooner they’ll move from feeling overwhelmed to feeling in control. The mantra is ‘start now,’” Carla concluded.

Following are eight steps 20-somethings can take to establish financial stability:

  1. Build your cash reserves, including an emergency fund. Unexpected expenses happen all the time, but if you have a cushion of savings, these unexpected expenses don’t have to derail you. Instead of draining your long-term savings account or falling into debt, you can simply use your cushion to stay on track, then rebuild your cushion for next time. How much should you set aside? Your cash reserves should cover six months’ worth of expenses. After you have this six-month cushion, you should also set aside a separate emergency fund, enough to cover 24 months’ of expenses for longer-term situations such as an extended illness. This may sound like a lot of work, but the small spending sacrifices you make as you build your cash reserves will be well worth what you gain in peace of mind.
  2. Participate in your company 401(k) or other retirement fund. This is probably the simplest and most tax-efficient way to save for retirement, so contribute the maximum allowed, if you can. (You can always fine-tune your contribution amount as you go.) Some employers will even match a percentage of what you contribute to the company 401(k) — this is basically free money, and another great reason to participate.
  3. Have just a little debt.  This may seem counterintuitive, but you do want to carry some debt, rather than none at all. Open a credit card with a modest credit limit and use it regularly, then— and this is key—be sure to make all your monthly credit card payments on time and in full. Doing this will help you build a solid credit history. You’ll need it to qualify for a loan someday, like when the time comes to buy a house.
  4. Save 10% of your income every year. If you develop the habit of saving 10%, no matter how much you earn, you will always have the confidence of knowing you are living within your means. This step is also what makes many other key steps possible: for example, saving the down payment for a house, setting aside a college fund for the kids or saving for retirement. Think of saving 10% as the way you ensure that you will be able to make ongoing investments in your financial health, year after year.
  5. Save your bonus, overtime pay, or promotion pay. It is tempting to treat your year-end bonus or other unusual income as play money. Don’t do it! Instead, sock away these lump sum amounts immediately, then leave them alone. Before you know it, you will discover that you are most of the way to where you need to be for retirement.
  6. Never borrow from your 401(k). Borrowing from your 401(k) is never a good idea. A loan will be considered an early distribution and subject to income tax and a stiff penalty. These costs will erode your hard work, even if you plan to repay the loan later. Instead, build your cash reserves and replenish them conscientiously, so that borrowing from your 401(k) never becomes necessary. If you are truly in a difficult place financially, consider a home equity line of credit or borrowing from a family member. It’s also possible to negotiate medical and credit card bills. Be sure to explore all your options before you touch your 401(k).
  7. If you’re married or have a child, purchase term life insurance to protect your loved ones in case something happens to you. To calculate the amount of the policy you should put in place, figure out how much support your family needs annually and multiply that by the number of years the support will be needed. It’s a good idea to ensure that the policy term covers children well through college, so a 20- or 30-year policy is usually best.
  8. Use extra savings that you won’t need in the next five years to start your first investment portfolio (after you’ve maxed out contributions to your retirement accounts).  Select a low cost index mutual fund or ETF with one of the high quality, low cost players like Vanguard, Fidelity or T. Rowe Price—they will help you choose the right one. You will need a minimum of $3,000-$5,000 to start, and should build it up to $25,000 before looking to establish your next investment goal. Taking these goals one at a time makes them simple and doable.


About SUM180
SUM180 is an online financial planning service designed by women for women. With the goal of making financial planning simple and affordable for women, SUM180 provides a radical alternative to current financial advisory offerings.

Specifically, SUM180 is differentiated in the following ways:

  • SUM180 meets women where they are. SUM180 plans are personalized to help women wherever they are right now on their financial journey; whether they’re just beginning, starting over or well on their way.
  • SUM180 plans are simple. Clients need only focus on just three of their most important next steps at any given time. This approach is empowering for most, but especially for women who have been “tuned out” of their financial picture for a period of time.
  • SUM180 doesn’t try to give clients a degree in finance. SUM180 clients don’t need to become financial experts to meet their financial goals. SUM180 provides the tools they need, without overwhelming them with the details they don’t need.
  • SUM180 offers a community for users, unfiltered. SUM180’s community forum allows users to support one another in their plans.
  • SUM180 serves; never sells. Earning and keeping client trust is SUM180’s highest priority. SUM180 never makes money based on the advice provided.

Additional information about SUM180 may be found at


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Robin Schoen
Robin Schoen Public Relations
215.504.2122 office
215.595.7542 mobile






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