7 Money Moves All 20-Something Moms Should Be Making

Our 20s are a strange, Twilight Zone era of our financial lives -- you likely have more money to your name than you ever have before, and coming off the tight, shoestring budget of your high school or college years, you feel flushed with cash. But at the same time, you're looking at more bills and expenses than you're used to, and those only double (or triple, honestly) when you're staring a new baby in the face.

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With all that in mind, we figured it was time for a definitive list of money moves for moms to make in their 20s. Never before have we actually felt inspired to talk about investment percentages and APRs, but hey, here we are.

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And you will too, we bet:

  1. Set up an emergency fund. "An emergency fund will ensure you have liquid cash to pay for unexpected issues," says Andrea Woroch, a nationally recognized personal finance expert. "If you receive cash for gifts like graduation or a birthday, stash it away into an emergency fund to create the cushion you need to focus on your other debts." 

    Setting up a separate savings account will put a mental block in place that'll keep that money safe for real and actual emergencies. Shoot for getting the account to three to six months of expenses -- your new car battery/kid's fixed tooth/replaced home heating system will thank you, promise

  2. Contribute to a retirement plan. Like, ASAP. No, yesterday. If you're working and you have a 401(k) available to you, use it, Woroch says -- especially if your employer will match your contributions. "Plan to deduct at least as much as they'll match (typically between 1 and 3 percent) so you're not leaving money on the table," she advises. "Otherwise, open an IRA account that works best for your situation and include monthly contributions in your budget."

    This is really key because the longer money sits in these types of accounts, the more valuable it'll be later on. If, for example, you contribute for 13 years starting when you're 21, you could have more than double in your portfolio than if you contribute for 28 years (more than twice as long) starting when you're 35. Compound interest is a beautiful thing, and now's the time to take advantage of it.

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  3. Be real about your debt. "Ignoring your debt will only cause bigger problems down the road," Woroch explains. "Late payments can devastate your credit score and make it very difficult to obtain loans in the future. If you can't afford payments, you may qualify for a financial hardship deferment or set up a payment plan that meets your budget."

    Since tackling debt can take years (if not decades), it's probably not a bad idea to budget for emergency funds and retirement plans first. Once those are out of the way, though, make debt your top priority. Even if you're on top of your payments, paying off more than you technically have to each month can take years off your schedule.
     
  4. Get a side hustle. Woroch says this is the best way to add to your income so you can contribute more to your emergency fund or pay down debt, if you can spare the time. "Consider freelancing for websites or content creators, or starting your own blog with affiliate links," Woroch recommends. "Sites like TaskRabbit.com offer a wide range of side gigs for extra cash, while Rover.com is perfect for dog lovers who have extra space for boarding."

  5. Stop letting FOMO rule your finances. The annoyingly omnipresent FOMO, or fear of missing out, tends to rule the finances of young people -- even the ones with kids. 

    "FOMO will hinder your ability to stay on budget and pay down debt," Woroch warns. "While it's okay to take part in the occasional party or weekend getaway, just make sure it's in your budget. Keep in mind that there will always be opportunities and the sooner you get your finances in order, the sooner you'll be able to enjoy a lifestyle with fewer monetary restrictions."

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  6. Limit lifestyle inflation. "Upon landing your first job out of school or getting your first bonus or raise, you may feel tempted to 'treat yo'self' and go on a spending binge," Woroch says. "The trick to getting out of debt faster and paving a secure financial future is to keep costs low. Stick to a tight budget until you make some large dents in your debt."

    Xavier Epps, financial adviser and owner of XNE Financial Advising, adds that as tempting as it is to buy new items, it's important to carefully consider the value of items you're considering -- whether it's new shoes for you or a fancy crib for your baby to be. 

    "Limit yourself on purchases per year," Epps says. "Resell values are extremely low in various asset categories and sometimes you have to ask questions like, 'How much use will I get out of this item?' and 'Is it needed now?'"

  7. Budget for your children. Epps recommends starting a section in your budget for your kids as soon as you have them. "Even if you don't use all of the funds each month, this line item is for the kids' necessities (not additional toys or clothes beyond what's needed)," Epps says. "If there are funds left over at the end of the month, roll it into a savings account. At the end of each year, move the balance in savings to a 529 college savings plan for the dependents so it's tax deductible in most states." 
     


Image via iStock.com/Tomwang112

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