Recent grads and young adults aren't always interested in establishing a solid financial plan. But they aren't alone; many people think their financial future is decades away or that they have plenty of time to earn money before they need to think about retirement. Taking a few simple steps early in your career (it's never too late to start) can significantly improve your resources and quality of life in the future. Making some key decisions and taking several practical steps will help you align your finances with the future you see for yourself.

Retirement Planning

When you are in your 20s, retirement seems like something that is a lifetime away. You have many other things to think about like getting married, getting a good job and possibly buying a house. While it may seem like something that you do not need to worry about, retirement planning actually is very important for young people. If you can get in the habit of setting aside a certain percentage of your income now (financial planners suggest setting aside at least 10% of your income) it becomes a habit that continues over your career. With the power of compound interest, you can build a nice nest egg by the time you retire without putting too much thought into it.
Consider Your Credit Card Use

Light credit card use is one of the best ways to help build your credit profile when you are young, but don't use that as an excuse to use plastic to buy things your can't afford. Many young people get in serious trouble with credit cards. If you decide to use credit cards, you need to use them sparingly. Credit cards are easy to use to make purchases (research shows people spend more when they use a card than when they pay for something with cash), and you might be tempted to buy everything you want until you reach your limit. This can be a quick way to financial ruin, and it could take you years to pay off the debt.
Build Up an Emergency Fund

Start building an emergency fund as soon as possible. An emergency fund is an amount of money that you set aside to help you with unexpected expenses. Setting a goal of saving three to six months of expenses in your savings account would be advisable. This way, if you ever lose your job or face some other type of serious emergency in the future, you will have enough money set aside to weather the storm.
Save for Big Buys, Like a House

If you are interested in eventually buying a house, you may want to start saving for a down payment now. While you could potentially buy a house with very little money down, it could hurt you in the long run. When you do not put 20 percent down on the house, you will have to pay private mortgage insurance, which adds money to your monthly payment. When you do not have any equity in the house, it can trap you in the property for many years if property values drop.