Everyone might be telling you to save money, but there are things 20-somethings should spend their money on. Although you're still a young adult, it's important to make responsible decisions and spend your money wisely. Understandable, most 20-somethings are interested in shopping, electronics and having a good time. But here's a look at seven things 20-somethings should spend their money on.
1. Health Insurance
Yes, you're young and you might have few health problems, but health insurance is one of the things 20-somethings should spend their money on. If you're a student, you may be covered under your parent's health plan. If not, don't underestimate the importance of health insurance. From personal experience, one trip to the emergency room can cost thousands of dollars, which can easily deplete your savings account. Even if you can't afford the best coverage, some coverage is better than none.
2. Life Insurance
Life insurance is relatively cheap if you're a young adult with no major health problems. If you're single with no dependents, you may feel life insurance is unnecessary at this point in your life. However, a policy can pay off your debts. Plus, the death benefit can cover your funeral and burial, taking the financial burden off your family.
3. Credit Report
Money experts recommend everyone check their credit report at least once a year for errors or signs of identity theft. Even if you don't have a credit history or a long credit history, it's important to stay on top of your report. Errors on your credit report can impact your ability to buy a home or car. Get your free credit report from Annualcreditreport.com.
4. Credit Monitoring
And while you're checking your credit report, it doesn't hurt to sign up for regular credit report monitoring services. These services are relatively cheap, costing as little as $10-$15 a month depending on the company. Basically, if anyone opens an account in your name, you'll receive an email alert. This is one of the best ways to detect identity theft early, before it ruins your credit score.
5. Retirement Account
Understandably, most 20-year-olds aren't thinking about retirement. But the sooner you start saving, the better. Your money can grow over the next 30 or 40 years, which may provide a very comfortable retirement. Join your employer's 401(k) plan or set up an IRA with a financial planner.
6. Starter Home
Likewise, most 20-something adults aren't thinking about buying a home. But if you have a stable job and enough money in the bank for a down payment, you might consider taking the leap. Buying your first property is an excellent way to invest in your future. You can build equity, and when you're ready to sell your starter home, you can put the proceeds down on a nicer place.
7. A Reliable Car
You might want to avoid a car payment and choose to pay cash for your automobiles. This can work, if you're buying reliable transportation. However, if you're constantly buying new used cars, or you're dealing with numerous costly repairs, you might be better off purchasing a newer model car. You can pay off the car in a few years.
There's plenty you can do with your money, but even if you're a young adult, it pays to make wise choices and spend your money on things that are financially beneficial. What other purchases should 20-year-olds consider making?