Your 20s is a time to enjoy your freedom and learn new life lessons. Often a decade of important decisions (career, marriage, home), it can also be a time for big financial mistakes if you’re not careful.

Making smart financial decisions now could lead to financial freedom in the future. It could mean the difference between retiring early or late, or whether you can afford the vacation home you’ve always dreamed about. Here are a few steps to build a solid financial foundation in your 20s.

1. Develop a marketable skill. Income is your wealth builder, and your 20s is a time to learn what you love – if you’re lucky, it will be what you went to school for. Find a skill that could translate into a career.

2. Make a simple budget. Sound easy? It is. By learning to create a budget now and sticking to it, you’ll also be able to apply that principle later in life.

3. Create a debt-repayment plan. Yes, you aren’t the only one who has enormous amounts of student debt. And waiting to pay it off until you’re more established in your career could have negative effects on your financial stability. Start paying it back now. It’s easy to set up automatic payments online so you aren’t tempted to skip a month.

4. Build an emergency fund. Even though you may live on little these days, it’s smart to have at least $1,000 set aside for emergencies. After all, it’s inevitable that your clunker car will break down eventually.

5. Start your retirement saving. Don’t stop reading now! This might be the hardest one to put into action, but completely worth it. The key to long-term compounding is to start early. If a 25-year-old invests just $100 a month, assuming an 8% average annual return, it totals to more than $300,000 by the age of 65.*

6. Start building your credit. Make sure to keep up with monthly payments on your loans and credit cards because that will be beneficial for your credit score. If you are considering opening a credit card, Navigator Credit Union has competitive interest rates and can help you manage payments.

* Rate of return is for illustration only and does not represent the return of any specific investment. Your returns will vary. Depending on the type of account, taxes may be due upon withdrawal.

Investment (and/or insurance) products:
Not federally insured
Not a deposit of this institution
May lose value

Record highs for stocks. Record lows for interest rates. Recent months have seen new records for the stock market and a continuation of the historic lows for interest rates. Consider these facts:

• The S&P 500 Index, which tracks the top 500 U.S. stocks, surpassed 1,900 – a record.*

• The Dow Jones Industrial Average, which follows 30 large publicly traded U.S. stocks, topped 17,000 – a record.*

• Certificate of deposit (CD) rates have never been this low for this long, with 6-month CDs below 0.15% – a record.*

• The Federal Reserve has kept rates on short-term funds under 0.25% since 2008 – a record.*

The stock market has made a steady recovery since the financial crisis of 2008, and the growth in the past year has translated into attractive equity gains for many investors. But with these new records, people are now worried another stock market drop could come to threaten their retirement plans.

Some investors have sought shelter from market volatility in certificates of deposit (CDs) and money market accounts. Unfortunately, those accounts have set records of their own – historically low returns that have not kept pace with inflation.**

There Could Be a New Way

There are new annuity products now available in the industry that allow you to participate in the market’s upside potential while setting a limit on your downside risk. Other annuity options let you guarantee a retirement income you cannot outlive. The new record stock market highs and interest rate lows could mean it’s time to review your current portfolio and discuss these new opportunities. It may be time to protect retirement gains and reduce risk as part of your overall investment strategy.

For more information about new retirement planning options, contact Jeff Hamm, the NCU Wealth Management Representative located at Navigator Credit Union at 228-474-3427.

* SOURCE | Dow Jones Industrial Average and S&P 500, finance.yahoo.com; 6-month CD rates, ratewatch.com; Federal Funds Rate, bankrate.com; July 30, 2014.

** Campbell, Dakin, “Banks Want Higher Interest Rates,” BusinessWeek, Bloomberg, November 2013.

All guarantees are based on the claims-paying ability of the issuer and do not extend to the performance of underlying accounts which can fluctuate with changes in market conditions.

Representatives are registered, securities are sold and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, IA 50677, 866-512-6109. Investment and insurance products are not federally insured, may involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. ANN-1213-NMPG

Credit allows us to borrow money to pay for items we couldn’t otherwise afford — like homes and cars and a college education. Mortgages and vehicle loans are examples of secured loans. The lender uses your home or car as collateral, and if you fail to pay back the amount borrowed in the allotted term, the lender can reclaim the item.

Unsecured loans are not backed by any type of collateral. You simply promise the lender that you’ll pay back the loan. This affords you some freedom in borrowing — you can use the funds to pay for a computer, a vacation or anything else you’d like. But that freedom comes with a price: higher interest rates than secured credit.

Types of Unsecured Loans

Three common types of unsecured credit are:

Credit cards. A form of revolving credit, the card issuer approves you for a set amount (your credit limit) and you access the credit whenever you need it. The lender charges interest on the balance each month and asks that you pay off a portion of the balance regularly.

Personal loans. Personal loans let you borrow a set amount of money at a particular interest rate, then pay it back in a series of fixed payments.

Personal lines of credit function very similar to credit cards, except the funds can be accessed by check, online transfer or withdrawal rather than a card.

When Unsecured Credit Makes Sense

While a personal loan may come with a higher interest rate than a secured loan, it offers a smart alternative to riskier forms of borrowing, like payday or pawn shop loans. Finance companies may charge excessive interest rates and their loans may come with unreasonable terms.

What’s more, a personal loan can help build your credit history and enhance your ability to qualify for better loan rates and terms in the future. Making payments on time and managing your loan responsibly hows lenders you’re a smart credit consumer, and may make lenders more willing to extend a loan in the future.

To learn more about how a Navigator Credit Union credit card, personal loan or personal line of credit can help improve your financial picture, talk to a representative today.