Smart Money Moves for Young Adults

Starting Out

5 Smart Money Moves for Young Adults

These easy strategies can help you get started on the road to financial independence.

Working for Kiplinger's has its perks, not the least of which is constant exposure to savvy financial advice. Especially for those of us who joined the staff early in our careers, we've been lucky enough to learn the best ways to handle our money. Here are some of the valuable tips we've picked up on the job, starting with my own lesson:

See Also: Our Special Report for Starting Out

Set Up an Emergency Fund

For years, when I had a financial crisis, I would speed-dial the Bank of Mom and Dad. I expected them to bail me out of tough financial surprises, from parking tickets to big dental bills. My backup plan was to charge emergencies to a credit card.

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The former strategy cost me in a strained relationship with my parents. How sad it must have been for them to get a call from me only to realize the chat would cost them hundreds of dollars. The credit card approach came with interest and lowered my credit score.

After I started working for Kiplinger, I learned that I needed an emergency fund that can cover six months’ worth of expenses, stashed in an easy-to-access savings account. Now, I put $100 a month into an American Express online account and add any extra income, such as holiday bonuses or birthday gifts, if I can. 


Providing myself with a cash safety net is the key to making my way to financial independence. It’s still a bummer to shell out the money to cover, say, replacing a furnace worn out by a polar vortex–plagued winter. But at least it doesn’t cost me extra interest or, worse, the respect of my parents.

For more information, see 7 Strategies to Build an Emergency Fund.

Scrounge to Save
By Ryan Ermey

While working as an intern at Kiplinger’s, I wait tables on the side. Holding down two jobs isn’t an ideal situation, but it has allowed me to pursue a career in writing while keeping food on the table and a roof over my head.

Washington, D.C., is an expensive city, and I’m on a shoestring budget, but I still contribute a small chunk of my paycheck—$100 a month—to my 401(k) plan. Kiplinger’s plan has the option of a Roth 401(k), and that’s what I use. I don’t get a tax break on the money I contribute, but I’ll get to make tax-free withdrawals in retirement. (And it’s a safe bet, considering my intern’s wages, that I’ll retire in a higher tax bracket than the one I’m in now.) I put all of my money in stock funds. At my age, I can take on the extra risk and go for a better return.


You read a lot about the “magic” of compounding. But it’s not magic. It’s math. The numbers say contributing as early and as consistently as I can is going to make me richer by the time I retire. That makes it worth working a little harder and living a little more modestly right now.

For more information, see Free Money for Retirement.

Balance Debt Payments and Saving
By Susannah Snider

Sometimes you can overdo a good thing. I have a manageable, ten-year repayment plan for my federal student loans, but I used to put every spare penny toward my student debt. I loathed having that five-figure number hanging over my head like a rain cloud. If I had a security deposit returned, I’d pay down my student loans. If I received a birthday check from my favorite aunt, I’d pay down my student loans. Got a raise? Yup, I’d pay down my loans.

But my tunnel vision wasn’t helping my overall financial health. I was paying down debt at the expense of my emergency fund and retirement savings. When my laptop gave up the ghost, I didn’t have enough cash on hand to buy a new one. My 401(k) was meager at best.


It took a year or so after graduation to realize that my monthly student-loan payments weren’t the only piece of my financial picture. I needed to build a cash cushion for unexpected expenses and start saving for the future. I’ve scaled back and now pay the monthly amount based on the ten-year plan, focusing instead on saving for retirement and putting up to 10% of my paycheck into an emergency fund.

For more information, see Don't Stress Over Student Loans.

Get a Roommate
By Lisa Gerstner

When I started working in the Washington, D.C., area after graduating from college, two friends and I lived in a townhouse that I loved. It provided easy access to public transportation, and it had a backyard patio as well as a spacious basement that came with a pool table.

By splitting the bills for rent and utilities three ways, my roommates and I kept our monthly housing expenses to about $900 per person—a fair price in a region with a high cost of living. Since then I’ve moved a few times, but I continued to share housing costs with a roommate. We found apartments that we could afford, in safe neighborhoods that were near the Metro and had a lot of young professionals. My current roommate and I are even comfortable splitting the price of some memberships, such as Amazon Prime and Costco.


Without housing expenses draining most of my paycheck, I’ve been able to save for retirement and spend money on things I value, such as travel. And I’m debt-free. I’ve never known the pleasures of living alone, but I’m convinced that living within my means feels even better.

For more information, see 8 Reasons You Fight with Your Roommates About Money.

Reshop Your Car Insurance
By Jessica Anderson

Writing about cars has its perks—such as driving new cars all the time. I still have my 1997 Honda Civic, which I drive once a week, but the insurance premiums seemed high. While working on a story about Progressive’s Snapshot tool, I gave it a test drive.

Here’s how it works: You plug a palm-size tool into the diagnostic port in your car, and it pulls data from the car’s computer and sends it to the company via a cellular network. The tool tracks the time of day you drive, your mileage, and your acceleration and braking rates. (Allstate’s Drivewise works the same way.) After 30 days, you may earn an initial discount; after six months, you send the tool back and become eligible for a permanent discount of up to 30%.

My monthlong test-run results showed I would qualify for 30% off with Snapshot, so I signed up. During the six-month monitoring period, I gave in to bad city-driving habits—some rapid accelerations and sudden braking—and earned only a 21% discount. But with discounts for being accident-free and having my homeowners insurance with Progressive, my rates went down even more.

For more information, see Getting Your First Car Loan.