Five moves to make with your money ASAP

“For the most part, millennials are not set up yet. We’re still trying to find our feet.”

That’s the first thing my financially savvy friend Kristin Prentice said to me when I saw her this week. My 26th birthday is fast approaching and has spurred all of these financial planning questions in my brain, in part because that birthday means I’m getting dropped from my parents’ health care plan.

“Don’t psych yourself out.”

That’s the second thing Kristin* (a senior registered client associate with Wells Fargo Advisors) said to me — too late.

But her perspective helped. She said to look at money like this: “It’s simply something that you use to get from point A to point B.”

With a half-off Malbec from Brazwell’s in hand, I learned five moves to make with your money ASAP:

(1) “No matter where you are, define your relationship with money as soon as possible.”

– Look at money, debt and investments as everyday tools. Be ready to take it all one step at a time.

(2) “Understand your debt and know your credit rating.”

– Know that there is no wrong kind of debt, whether it’s installment debt (with a fixed monthly payment and set payoff schedule like car loans, student loans and mortgages) or revolving debt (with no set payoff period and varying payments like credit cards).

– Consolidate student loans when possible.

– Don’t have a credit card? Look for one with low rates and pay it off every single month, using it only on items you can afford. Have a card? Check your free credit report every year with AnnualCredit Report.com (endorsed by the US Federal government).

(3) “Create a budget and live by it.”

– Kristin’s inner geek shines through here with her handy-dandy budget worksheets to help track spending, account balances, earnings, etc. Try Mint.com or a Federal Trade Commission sheet.

(4) “Now that you’ve taken control, you need to start saving.”

– Create an emergency fund with three to six months worth of expenses in the event of a job loss or trip to the ER.

– Start saving for retirement as soon as possible, since Social Security will undergo significant restructuring by the time we retire. Contribute to your 401k and put in at least as much as your company matches. If you have a Roth 401k, utilize that first.

Note: When you change jobs, don’t cash out your 401k. (“This is the biggest mistake millennials make.”) Roll it over into an IRA or leave it in the current 401k.

– Don’t have a 401k company option? Open a Roth IRA, an SEP, a SIMPLE IRA or, if needed, a traditional IRA.

(5) Don’t be afraid to hire help or ask questions.

– Consider a financial adviser/planner for questions about your 401k, your investments, your life insurance, your stocks, your bonds…

– Consider an accountant/CPA/tax adviser with help tax planning.

And, above all, pour yourself a glass of something good. Relax. These choices are yours.**

*Disclaimer: Kristin Prentice and Wells Fargo Advisors are not a legal or tax advisor. However, she will be glad to work with you, your accountant, tax advisor and/or lawyer to help you meet your financial goals.

**Disclaimer: That last line of advice was courtesy of Katie Toussaint. She doesn’t know much.

Photos: Katie Toussaint

This story was originally published November 13, 2015 at 12:00 AM with the headline "Five moves to make with your money ASAP."