Apply this SPF 15 protection to your money (for people in their 20s)

Good financial habits are like sunscreen – the earlier you begin to apply them the more you’ll thank yourself as you age.

Toward that goal, here are 15 SPF (Sound and Practical Finance) Tips to make your life easier:

  1. If you have a 401(k) or other retirement plan option through your work, contribute the maximum each month, especially if your employer offers a matching contribution. Those employer matches are an important part of your benefit package so make sure you access them.
  2. Consider the magic of compound interest. If you invest wisely, any money you save will earn interest. As that pool of money grows, so does the amount it earns. For instance, if you save $3,000 a year annually from the age of 22 through 30 and you earn a respectable 6% on that money, you will have saved $34,761 in just those nine years. And, that’s where the magic begins. Because even if you never save another dime, that pool of money will continue to grow by earning 6% each year. If you don’t touch your original $34,761 and allow it to earn that 6%, you will have accumulated $267,175 by age 65. If you continue to save $3,000 each year between 30 and 65, and that money earns 6% annually, you could be a millionaire by the time you retire. Begin saving early, invest wisely and your 65-year-old self will be very, very happy with you.
  3. Develop the healthy habit of designing a reasonable budget for yourself and then sticking to it. There are plenty of apps that make this process less daunting than it used to be. But, you still have to look at the numbers. Sit down once a year and review your spending habits. Then, adjust your budget accordingly. Budgeting sounds restrictive, but if you commit to it, you’ll find you actually have more spending money than you did before you started paying attention. This is another area in which your retired self will be very grateful to you for your efforts.
  4. Choose a power of attorney for healthcare and complete the necessary forms. If you are over 21 and single, you will need to choose someone to make medical decisions for you should you become incapacitated. Otherwise, you will be at the mercy of the medical facility that treats you. You don’t need an attorney to complete this process. Just download the form from your state’s Department of Health Services.
  5. Start an emergency fund and be firm about how broadly you define emergency. Not only will a rainy-day fund give you peace of mind, it also will prevent you from a panic-induced accumulation of credit card debt.
  6. Pay off your credit card each month. Don’t allow yourself any leeway here, because that debt grows quickly. You really don’t need more than one credit card either. Choose one with a good reward program and low interest and stick with it.
  7. Be patient with big ticket purchases. Don’t buy more than you can afford and consider your whole budget when you make that decision. Yes, the bank will approve a big loan for that expensive car you have your eye on, but is it worth a much smaller food and entertainment budget until you get it paid off? And, have you factored in the insurance?
  8. Get ready to pay for your own health insurance. Currently, you may be able to stay on your parent’s policy until you turn 27-years old. Do your research long before that and look for a job that provides you with health insurance. It may seem expensive, but a solid health insurance policy will allow you to get the care you need and it will help you avoid bankruptcy should an emergency arise.
  9. Develop healthy habits now – exercise, eat nutritional food, get plenty of rest and avoid overconsumption of alcohol. Take care of your mental health as well and don’t be afraid to seek professional help. Staying healthy is the easiest way to keep money in your account.
  10. Understand taxes and specifically how the marginal tax rate will affect you. You should know your tax bracket and whether that raise you received will bump you into a higher one.
  11. Consider buying renter’s insurance but make sure you read the policy carefully so you’re fully covered in the event of theft, a fire or natural disaster.
  12. Check your credit report. You can correct any errors and double check for any instances of identity theft.
  13. Claim your Social Security account. Go to and set up your login and password. Then, check your account annually. Do this to track your earnings and correct any mistakes, and to make sure no one else is claiming your account.
  14. Try not to defer your student loans. Pay them off as soon as possible and get on with the business of enjoying your life.
  15. Pay attention to your phone bill. According to Consumer Reports, 70% of American overpay for their mobile phone plans either because they aren’t using all the data in their plan, or they aren’t taking advantage of lower priced plans that come out after they sign up.

Lastly, it’s not too early to sit down with a financial planner, preferably one with a fiduciary responsibility to you. An annual review will allow you to make sure you’re getting the most out of the money you’ve earned and help set you up for a productive year.