For young adults in their 20s, it can be challenging to understand how to manage personal finances and stay organized after entering the workforce. Some people may be underpaid or are have new bills to pay that they’re not familiar with, which can make it challenging to learn how to stay in control of your finances. If you want to obtain the right advice and get a proper start in your 20s, there are a few essential tips to follow to handle your money correctly.

Begin Investing

Many millennials have a fear of investing due to a lack of knowledge and the risk involved. After experiencing the recession in 2009, they’re afraid of putting any of their hard-earned money into the stock market. If you want to invest but aren’t sure where to start, begin with index funds, which allow you to withstand any negative market fluctuation. Consider it to be a long-term decision that will pay off over time than immediately.

Begin Planning for Retirement

It’s never too early to begin planning for retirement, which will require you to take advantage of a 401(k) plan through, especially if your employer matches the money that you put into the fund. You can also open a Roth IRA, SEP IRA, or a Traditional IRA.

Establish Credit

Building credit is necessary for the future when you’re ready to purchase a new car or buy a house. You’ll need to open a credit card and have discipline with using it. Consider using the credit card for utilities or bills to avoid accumulating debt over time. Make your payments are on time and avoid closing any of your accounts to ensure that you have a history of credit, which will boost your score. Avoid overusing your credit cards, which can harm your score.

Create a Specific Budget

You should follow a strict budget that allows you to have control of every dollar that you earn and determine how you want it to be spent. Your budget should also include miscellaneous expenses that are infrequent, which includes haircuts, oil changes, and gifts for family members or friends. You’ll also want to incorporate payments towards debt that you have into your budget to ensure that you can work towards becoming debt-free in the future.