High school and college students can start building financial success early by learning the basics and following a few helpful steps. This checklist offers guidance to help them along the way. Most importantly, young people have a key advantage—time.

“Young people have perhaps the biggest advantage compared to other investors: time. The earlier you learn and apply key financial skills, the greater your rewards will be over the long term,” says Phillip Durbin, a financial planner at Generational Wealth Development.

KEY POINTS

• Starting to invest in your 20s can help you build long-term wealth.
  
• Creating a budget helps you find smart ways to save.
  
• Compound interest works best the earlier you start.
  

Financial Checklist for Young Adults

You can set yourself up for financial success by following the steps below:

• Create a realistic budget that covers both needs and wants.
  
• Begin saving and build an emergency fund.
  
• Be careful with how you use credit.
  
• Don’t be afraid to start investing.
  

Learn How to Budget

Understanding your monthly income and expenses is the first step to a strong financial future. Add up all your bills, spending, and income each month to create a budget. After covering your bills, check how much money is left over. Instead of spending it all, this is a good time to start saving.

Understand the Difference Between Wants and Needs

As you build your budget, think about what you truly need versus what you simply want. Needs include things like housing, food, and transportation. Wants are extras like new gadgets, event tickets, or snacks at the store. Make sure your needs are covered first, then see what wants can fit into your budget.

“Prioritize spending on things you need (housing, food, gas) before things you want (new phone, concert tickets, gas station junk). Budget for some fun, but learn to say no,” says Durbin.

Time to Start Saving

“The sooner you learn to budget for your life, the better off you’ll be. Once you control where your money is going, you can start controlling how much you save,” Durbin says. “Pay yourself first by saving a portion of any money you earn or receive before spending it.”

A good way to do this is by setting up automatic transfers into a high-yield savings account or a brokerage account.

Learn the Power of Compound Interest

Where you save your money also matters. Compound interest means you earn interest on both your original savings and the interest it already earned. Over time, especially if you start young, this can help your money grow faster.

“Take advantage of compound interest by contributing to a 401(k) or Roth IRA as soon as possible. Even small contributions in your 20s can grow significantly over time,” says Daniel Milks, a certified financial planner and founder of the Fiduciary Organization.

Build an Emergency Fund

Life doesn’t always go as planned. A car repair, medical bill, or job loss can happen at any time. That’s why it’s important to have a savings cushion for unexpected costs.

“Aim to save three to six months’ expenses in a high-yield savings account. This provides a financial cushion for unexpected expenses like medical bills or job loss,” says Milks.

Use Credit Wisely

Be careful with how you use credit. Setting up automatic payments can help you avoid missed due dates. Try to keep your credit card balances low, and only borrow money when you really need to. Over time, these habits can help you build good credit.

“Build a strong credit history by paying bills on time, keeping credit utilization low, and avoiding unnecessary debt. Good credit helps with securing loans, renting apartments, and even job applications,” Milks explains.

Don’t Be Afraid of the Stock Market

Investing while you’re young is one of the best financial moves you can make. You have time on your side, and that makes a big difference. Don’t let fear hold you back from learning about investing.

“The stock market can be this big, scary beast, but it doesn’t have to be. You have the biggest advantage of anyone: time,” Durbin says. “Spend the time learning about it now, so it can benefit you for the rest of your life. This knowledge could save you millions of dollars over your lifetime; isn’t that worth the time to learn it now?”

TIP
If you’re under 18, you can start investing through a custodial account. This type of account is managed by a parent or guardian until you turn 18 or 21, depending on your state.

To get started, learn the basics of investing. Set clear goals, choose the right investments, and pick a brokerage account that fits your needs.

The Bottom Line

These tips will help young adults start building a strong financial future. Every step matters, so take them all seriously as you begin your journey. Budget wisely, use credit carefully, save for emergencies, and know the difference between needs and wants. Above all, start investing early and understand how compound interest works.

By beginning to invest in your 20s, you give yourself a real chance to build long-term wealth. So don’t fear the stock market—use it to your advantage and plan for a better future.