If you’ve recently graduated college or are just beginning your career, a financial advisor specializing in serving young adults can help you make smarter money moves.

While some people may believe financial planning for young adults is fairly straightforward, the reality is that your 20s and 30s can be a pivotal time when financial decisions can have significant consequences decades later. For example, a thoughtful plan to save for a house, strategies to pay off student loans, and learning how to make the most of your employee benefits like a 401(k) plan and Health Savings Account can increase your chances of being able to retire comfortably at an earlier age.

A financial advisor specializing in working with young adults understands how to answer their clients’ questions as they build their lives and establish strategies to help them achieve their financial goals. And most of these advisors offer very affordable pricing for young adults just starting out in their careers, entering new relationships, and growing families.

You’ll likely find dozens of nearby financial advisors well-suited to help you reach your money goals with a personalized plan. But it may be more difficult to find a local financial advisor who specializes in serving young adults.

Fortunately, many financial advisors offer virtual services so you can meet online no matter where you (or they) live. This means you can choose to hire a specialist financial advisor who lives hundreds of miles away if you decide their knowledge and experience working with young adults is a better fit to help with your unique financial planning needs.

In this guide, we’ll share useful financial tips about managing your money as a young adult, along with guidance to help you get started in your search for a financial advisor. We’ll also introduce you to financial advisors featured on Wealthtender specializing in working with young adults and who you may want to add to your shortlist.

Financial Tips for Young Adults

You are only young once, but life as a young adult is not always fun and games. Young workers, in particular, face a number of challenges, from finding their first apartment to trying to make the rent each month. If you are just getting started in life, you might think you do not need any financial planning tips, but now is actually the best time to get started.

The sooner you start saving, the easier it will be to reach your goals later in life. The power of compounding means that every dollar you save now can pay huge dividends for the rest of your life. You do not have to live like a pauper or give up the fun things you like to do. Saving even a small amount now is enough to get you started. Here are four tips to get you started.

1. Put Money in your 401(k) from Day One

Participating in your 401(k) at work is perhaps the most important thing you can do to secure your financial future. The great thing about the 401(k) is the money comes out of your paycheck before you see it — making saving easy and relatively painless.

You can start with as little as 1% of your pay, so go ahead and sign up even if you think you cannot afford it. As time goes by, you can ramp up the savings and watch your money grow. You’ll also benefit from “free money”, assuming your employer offers a 401(k) match.

2. Make a Budget

Now is the time to make a budget and find out where your money is going. It might not be a fun thing to do, but creating a budget is an important part of being a financially responsible adult.

Your budget does not have to be elaborate to be effective. Something as simple as a sheet of paper or a spreadsheet listing income and expenses is enough to get you started. If you need help, there are plenty of budget tools and resources available online.

3. Take Care of Yourself

You might not think that staying healthy could have an impact on your finances, but living a healthy lifestyle can save you money in many different ways. From lower out-of-pocket costs at the doctor to better earning power, your health impacts your wealth more than you might think.

Many young people work hourly jobs, and missing a shift could reduce the size of their paychecks. Staying healthy can maximize your earning power. In addition to the increased earning power, staying healthy could reduce your out-of-pocket healthcare costs. Many young workers choose the lowest cost health insurance – and that is often a high-deductible policy. Eating healthy and following preventative care recommendations can keep you out of the doctor’s office and keep more money in your pocket.

4. Limit Your Use of Credit Cards

Credit cards can be valuable tools of convenience, but they can also be dangerous debt traps. Keep a credit card for emergencies, but keep it at the back of your wallet and pay cash for everyday purchases.

As you learn to budget your money more effectively and live within your means, you can start using plastic for ordinary purchases to take advantage of points, air miles, and other rewards. If you feel your willpower slipping, however, it is time to put that credit card away and make the switch back to cash.

While young adults face a number of unique challenges when starting their financial lives, none of those obstacles are insurmountable. With some willpower and some common sense, you can take control of your finances and start saving today for a better life tomorrow.

How Young Adults Can Build Their Credit Profiles

A good credit score is important for everyone, but it can be especially critical for young people just starting out. Without savings to fall back on, young workers may be more likely to borrow money, and every minus point on their credit score will literally cost them more money.

Credit scores for young people can sometimes seem like a catch-22. Lenders may be reluctant to loan money to young people who do not have a credit history while building up a credit history cannot happen without those sorts of loans. If you want to help the young people in your life build up their credit profiles and improve their credit scores, here are some creative ways to make that happen.

1. Sign Up for a Secured Credit Card

Traditional credit cards can be risky for young people who have not developed fiscal discipline, but secured credit cards are different. A secured credit card is tied to a bank account, with the limit equal to the amount on deposit. That makes the secured credit card an especially good vehicle for young people who need to build their credit scores quickly.

You can think of a secured credit card as a set of financial training wheels. The young person who gets the card can learn about the ins and outs of spending, all while growing their credit score through a series of on-time payments. Armed with the knowledge they gain, young adults can move on to a traditional card and continue their journey to a stellar credit score.

2. Seek Out a Credit Builder Loan

While lenders can be reluctant to loan money to young people who lack a credit history, that reluctance is far from universal. In fact, some banks offer special credit builder loans for young people and others who do not yet have an extensive credit history.

If you have an existing banking relationship, you can contact the institution and ask about these types of loans. Taking out a small credit builder loan and paying it off quickly can be a fast route to a good credit history and positive credit score.

3. Become an Authorized User on a Parent’s Credit Card

Lastly, adult children can become authorized users of their parent’s credit cards. By completing transactions and making payments on time, young adults can begin to build up a separate credit profile and, hopefully, a stellar credit score.

Building credit can be a slow process, and that is doubly true for young adults who are starting from zero. Most young adults will be entering the world without an extensive credit history, and that can make qualifying for loans and securing credit cards that much more difficult. The tips listed above can help the young adult in your life build credit fast — even if that young adult is you.

Smart Tips for Finding a Financial Advisor

Before hiring a financial advisor, here are a few quick tips to help you find the best advisor for you.

Get to Know Financial Advisors for Young Adults

📍 Click on a pin in the map view below for a preview of financial advisors specializing in serving young adults and who can help you reach your money goals with a personalized plan. Or choose the grid view to search our directory of financial advisors with additional filtering options.

Six Money Mistakes to Avoid as a Young Adult

People often tell young adults that they should have fun while they can before they get old. While it may seem benign and reasonable (to an extent), this type of thinking often leads to poor financial choices. Here are six ways young adults mishandle money.

1. Not Saving First

Effective savers treat their savings accounts like any other bill that needs to be paid. Consistently adding to your savings not only allows you to reach your financial goals sooner, but also builds good habits for the future.

Young adults living without a budget spend their money without a plan. If there is any leftover money at the end of the month, it may go into savings; more likely, however, it will just get spent.

2. Giving into Wants

Being financially wise is all about knowing the difference between “needs,” such as food and housing, and “wants,” like video games and designer clothing. Needs should always take precedence, with unnecessary purchases being made only after meeting savings goals.

Young adults who see material possessions as status symbols want to have the latest electronics and a new wardrobe every season. Giving in to every want, instead of being satisfied with what you have, can quickly lead to crippling consumer debt.

3. Overspending on Nights Out

It’s important to have fun while you’re young, but going out every weekend is a bad habit to develop. Young adults attend parties and go out to bars more often than any other age group. Alcohol is expensive, and drinking in excess is not only bad for your overall health, but it can also be a budget killer.

It is much more financially responsible to find hobbies that are cheap or free instead of having frequent, expensive nights out. This is especially true if you have loans or consumer debt.

4. Swiping Without Thinking

Now that most financial transactions are done with cards instead of with cash, it is much easier to spend money without thinking of the immediate consequences. Swiping a card does not have the same mental effect as does handing over tangible paper money.

Most banks do have free apps that make it easy to check your accounts, but many young adults are not checking their bank balances nearly often enough. With a swipe a card, money gets spent more freely and, therefore, more irresponsibly.

5. Overusing Credit Cards

Credit cards are a great financial tool for helping to build your credit score. Since credit history is necessary for things like home and auto loans, young adults are often encouraged to get a credit card as early as possible.

To use a credit card effectively, it should be paid off in full every month to avoid interest penalties. However, since many young adults have low incomes, they often become reliant on credit cards to make ends meet. Having high balances, they can’t pay off means they end up paying hundreds or even thousands in interest.

6. Not Seeing the Big Picture

The ability to save money does not come naturally for most people. It’s hard to learn to ignore your immediate wants to focus on your future goals.

Young adults have an especially hard time putting money aside since things like home buying and retirement seem so distant in the future. They believe they’ll have lots of time to save, so there’s no need to start doing so right away. These bad saving habits often follow them far into the future.

For the most effective results, money management skills should be learned as early in life as possible. However, it’s never too late to change poor habits. By identifying the common ways they mishandle money, young adults can take steps to correct their behaviors and become more responsible in the future.

🙋‍♀️ Do you have questions about financial planning for young adults? Use the form on this page to submit your questions, and we’ll update this article with answers from the financial professionals and educators in the Wealthtender community. You can also contact the financial advisors featured in this article directly to set up an introductory call or ask your questions by email.

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