The Best Financial Advice for Every Year: Age 21

Advice For Millenials

This is the second in a monthly series about specific age-by-age financial advice for 20-somethings. To check out my advice for 20-year-olds, click here.

Age 21 is full of major milestones: you can legally drink, you can legally gamble, and any vestiges of “childhood” – like parental consent for marriage or having a provisional driver’s license – are officially a thing of the past. But with all of these new freedoms comes new responsibility as well; that applies to managing your finances as well.

My financial advice for 21-year-olds is simple: have a plan. When I was 21, I was heading into my senior year of college; my husband was 21 when he graduated. For many of us, 21 is a pivotal age – it marks not only the official, legal end of childhood, but for many, it marks the end of your formal education.

So at age 21, it’s crucial that you take stock of where you’re at financially, and where you want to go. By age 21, you should know:

  • The exact amount of your student loan debt. American student loan debt now tops $1 trillion, and the majority of students will leave college (note I didn’t say “graduate from college” – if you took out loans, you’ll have to repay that debt whether you graduate or not) owing money. If you don’t know exactly how much you owe and the terms under which you’re expected to repay it, you’re already one step behind;
  • Any other debt obligations you’re facing, whether that be credit card debt, a car loan, or something else;
  • Approximately how much money you can expect to earn once you’re out of school. There are a lot of great websites out there that will give you estimated incomes for jobs based on location, education, and a variety of other factors. It’s critical that you know how much money is coming in, otherwise you won’t know how much money can go back out to pay bills, fund an emergency savings account, or just have fun;
  • How to construct a budget. This includes everything from your rent and debt repayment obligations to expenses for gas, food, utilities, telecom, clothing, etc.

Once you’ve figured out the four steps above, you’ll have the knowledge to enter adulthood with both eyes open. I knew far too many 21-year-olds (my husband among them) who entered adulthood with no idea how to manage their finances; his parents had always done it for him, and when he graduated, he found himself completely clueless how to do it himself.

Libby Balke

Libby is a jack of all trades, master of… well, you know how the saying goes. Media consultant by day, mommy by night, you can usually find her with a glass of wine in hand, provided the kids are in bed!

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