For some of you, college will be ending soon and you will be transitioning into the ďreal world.Ē For others, maybe you have a few years under your belt. Either way, itís important to keep a few financial guidelines in mind while you navigate your way through your early professional years:
Identify your expenses.
You probably have a pretty good handle on how much youíre spending for rent and utilities, but dig a little deeper. How much are you spending on clothes? Restaurants/bars? Gas? Those expenses can be eye-opening at first look. Identifying what and how much you are spending is good practice for all ages. Itís one of the easiest ways to identify what is wasteful spending and what is not.
Start saving now!
The rule of thumb generally is to have between three to six months worth of take-home pay, aka an emergency fund. What I advise clients to do is create a savings account and set up automatic transfers from your paycheck. I recommend an account with no card or checkbook attached to it, making it more difficult to access funds, reducing the temptation to dip into those funds.
Keep credit cards to a minimum
When you are in your 20s, typically one or two credit cards are all you need. When looking for a credit card, look for cards that offer low rates, some even come with an introductory rate of 0 percent interest for a period of time, just make sure you understand what the rate is after the introductory period. Itís important to have credit cards in case of emergencies or large expenses that you intend to pay off quickly. Be sure to pay off your credit card at the end of each month. Letting credit card balances linger can negatively affect your credit score.
Your credit score is not something to mess with
Chances are young adults will have little to no credit. Now is the time to build it. Building your credit is all about consistency. It would be wise to have at least one bill in your name, and making consistent on-time payments will help build your credit. Late payments or collection accounts all contribute to a lower credit score. High credit card balances also contribute to a lower credit score. You can check your credit score by obtaining a free credit report, at By law, you are entitled to one free credit report every 12 months. I would recommend everyone do this and look for any discrepancies and clear those out immediately.
Participate in your companyís retirement plan
Itís never too early to start investing for your retirement. If your company has a 401(k) or other defined contribution plan, take advantage. Many employers often match a small percentage of your contributions to the plan, essentially free money. Make sure you are contributing at least enough to get the full match from your employer if you can. If you are in your 20s, you can probably afford to invest more heavily in equities since, in theory, you will not be touching these funds until your retirement. The compounding benefits of investing are essential to your retirement: A 25-year-old who invests $6,000 a year ($500/month) could accumulate at retirement over $1.5 million (assuming a 7 percent rate of return).
Anticipate future large expenses, and create a funding plan
My fiancťe and I opened an account in both of our names initially to fund a trip together. The trip came and went, and now that account is being funded for our wedding. Now, Iím not recommending you share an account with someone; but my point is, anticipate big expenses and fund them early. That way it is not a huge drain on your bank account. Whether its getaway trip with friends, a nice watch, or something as miserable as car repairsĖ just be prepared. You could create a separate account and fund that for anything-maybe a nice gift to treat yourself for a job well done for following the steps above. Just donít break the bank.

Dustin Obhas is a certified financial planner with CLA Financial Advisors, LLC located in Chicago and Los Angeles. Dustin graduated from Western Michigan University with a bachelorís degree in business administration, with a concentration in finance.