If you’re in your 20s, retirement is probably the last thing you are thinking about. But, it’s never too early to start planning for your future, and your 65-year-old self will thank you for being so smart in your 20s. So, what do you need to know about planning for the future before you hit the big 3-0? It’s all about smart investments, reducing credit card debt, and buying the right property.

  1. Make Retirement Savings Part of Your Budget as Soon as You Earn Your First Paycheck

When you’re just starting out in your career, it’s hard to deduct extra money from your paychecks. You probably have school loans, some credit card debt, and some unpaid parking tickets hanging over your head. But, you need to start saving for retirement as soon as you start earning paychecks.

The best way to hold yourself accountable for your retirement savings is to make the contributions to your 401(k) or Roth IRA a part of your budget. Better yet, sign up to have your 401(k) contributions automatically deducted from your paycheck before taxes or set up automatic payments to your Roth IRA through your checking account so you don’t even miss the money.

Of course, the sooner you start saving, the more money you will have during your retirement years. If you begin saving in your 20s, you maximize your compounding potential. Essentially, your money has more time to grow and each year’s gains will create their own gains for each consecutive year. As CNN Money points out, a person who starts saving for retirement at age 25 and contributes the same amount each year for 10 years will actually have a larger retirement pot than someone who starts saving at 35 and contributes the same amount each year for 30 years.

  1. Make a Plan and Pay Off Credit Cards

20-somethings need to face credit card debt head-on to break the credit-card-debt cycle. Take a good look at how much credit card debt you have and budget for paying it off as quickly as possible. First, you will improve your credit score and have more financing options when you purchase a car and a house. You’ll also avoid making unnecessary purchases when you are aware of your credit card balances and have a plan for paying them off quickly. Making a plan to pay off your credit cards also helps you avoid losing more money to interest.

  1. Become a Homeowner Sooner, Rather than Later

Yes, purchasing a home is a huge step for 20-somethings. But, there are benefits of buying a home that you should be aware of even if you hesitate to take on a mortgage early in adulthood.

The first step toward buying a home in your 20s is to view it as an investment rather than an expense. When you buy a home, you make an investment that is likely to grow, given that house prices typically increase over time.  You also gain equity when you purchase a home; you’ll have an asset and own property rather than paying your landlord and not having anything to show for your monthly rent payments. In many cities throughout the United States, such as Omaha, New Orleans, and Louisville, buying a home now is cheaper than renting.

Renting can sometimes feel like you’re living in someone else’s home, but buying a home can feel more like you’re part of a community as you get to know other locals and develop meaningful relationships with other homeowners in the neighborhood. Part of being a community member also means that you have more influence in local affairs and issues that affect your property and you. As HomeAdvisor points out, “Local homeowners generally have more clout–individually and through ratepayer’s associations–when it comes to development proposals, school issues, changes to traffic control and routing and the like.”

Life significantly changes for 20-somethings as they enter the real world and begin taking on the responsibilities of adulthood. But, you can prepare for a brighter, more successful future if you make retirement savings part of your budget, follow a plan to pay off credit cards, and become a homeowner as soon as possible.

Author: Jackie Waters