Financial Tips for Younger Investors

If you're like many "twenty-somethings," the concepts of personal finance and investing may seem daunting. They don't have to be. In fact, this is a perfect time for you to start simply with an informed, disciplined approach to managing your money – and making your money work for you.

Seven Common-Sense Tips

These seven common sense financial tips for young adults can help you get started.

1. Pay yourself. Take on the mentality of a squirrel with winter looming: hoard money as if it was acorns. Even a small amount saved each month will add up over time.
2. Identify your short- and long-term goals. Whether it's funding a vacation in a year, buying a car in three years or making a down payment on a home in five years, your game plan must support your goals. A financial advisor can help you choose investments that suit your goals and risk tolerance.
3. Set up an emergency fund to cover the unexpected. A solid emergency fund should cover six months of living expenses, but any savings is better than none.
4. Think retirement. It may seem eons away, but the earlier you start saving for retirement, the more you can take advantage of compound interest, and the less you may need to invest to have the money you need in retirement. Here are some saving strategies:
   
   
   • – Many employers offer retirement plans, and may also match part of the amount that you contribute. Get the free money: take full advantage and contribute at least the maximum of what your company will match.
   • – Look into Roth or Traditional IRAs, too. These Individual Retirement Accounts can help you save on income taxes.
5. Don't rely on credit cards, and don't wait to manage the debt that you have. Whether it's a credit card, car loan or student loan, develop a plan to pay off your debts – but more importantly, don't incur new liabilities. Consider paying down the highest interest rate credit card first.
6. Maintain the best possible credit score. Like respect, credit worthiness is the easiest thing to lose and the hardest thing to get back. Your score will be a major factor to determine what type of loan you qualify for – or if you qualify – when it comes time to purchase a car or home. Your score can also impact how much you pay for auto insurance.
7. Create a budget and stick to it. A budget can keep you in control financially, no matter what your age. Consider a "50/30/20 budget" where 50 percent of your income goes to support your needs, 30 percent your wants and 20 percent into savings.

Time is on your side

The sooner you get started with investing, the better – especially when it comes to your retirement. If you're twenty-something today, you may not have the benefit of a pension when you retire or even an inheritance you can count on. The money you have to spend in retirement may depend largely on the money you've personally saved.

But you do have time on your side. This chart shows how your investments can compound over time. Notice how wise and consistent investing of small amounts of money early on is a far more prudent approach than investing large sums with a shorter timeframe in the market.

Ready to Get Started? 

A financial advisor can help you develop an easy-to-follow investment strategy and set up monthly, automated contributions to your savings and investment accounts. If you don't have an advisor yet, learn how you can choose an advisor who's right for you.

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.

"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries.

111379