4 Financial Goals You Should Set in Your 20s

Welcome to adulthood. Here's how to start off on the right foot.

You might kick off your 20s with a couple more years of college. Then follow that up with an entry-level job. And an entry-level salary. But that doesn't mean you can't take charge of your finances before you turn 30.

Here are a few important money-related goals to set during this pivotal decade.

1. Build a solid emergency fund

Being young doesn't exempt you from unanticipated expenses. They can happen to anyone at any time. Without a healthy savings account, you may have to resort to debt when your car breaks down, your home needs repairs, or you get stuck with a whopping medical bill.

That's why you need an emergency fund. Ideally, you'll have one with enough money to cover at least three months of essential living costs. For better protection, aim higher -- six months' worth of expenses should do the trick.  

2. Eliminate unhealthy credit card debt

Mortgages are "good" or "healthy" debt. Credit card debt is not. If you're carrying credit card debt, aim to shed it all during your 20s, because the longer it lingers, the more interest you'll pay on it.

See about refinancing your credit card debt to a loan with a lower interest rate than your credit cards charge. Or look at a balance transfer and move your existing balances to a new card with a more favorable rate. 

3. Learn how to budget

Budgeting might seem like a waste of time, but it's one of the most effective money management tools out there. Following a budget gives you a better understanding of where your money goes month after month. You'll also have an easier time managing your cash flow and meeting savings goals.

Best of all, setting up a budget is pretty easy. Just list your recurring monthly expenses, factor in once-a-year expenses, and compare your total spending to your total pay. Then make adjustments if you're not happy with how those numbers look. 

4. Boost your credit score

The higher your credit score, the greater your chances of getting approved for a loan. You'll also get a more favorable rate. This comes in handy when you're looking to buy a home, car, or anything else you can't pay for outright.

There are several things you can do to raise your credit score. The most important is consistently paying your bills on time and in full. Avoiding large credit card balances can also help keep your score in good shape. The less of your available credit you use at once, the more you'll help your score.

The smarter you are with money matters during your 20s, the more financially secure you'll be in your 30s and beyond. As you navigate the next 10 years, pay attention to the above items. You'll be thankful for it later on.