In your 20s and starting your career? Six steps to shape up your finances.

If you’re a recent college graduate or in your first or second job, Tropical Financial Credit Union is here to set you up for financial success. Check back every week for information and advice.

Let’s start with six steps you can take right now to improve your finances:

Step 1: Create an affordable budget (and stick to it)

Start the year by crafting a budget aligned with your financial goals and lifestyle. Use the 50/30/20 rule as a guideline: Allocate 50% of your income for essentials, 30% for wants, and 20% for savings and debt repayment. Manage your money smarter by:

• Tracking your spending for the past few months to understand your habits
• Dividing your expenses in categories such as rent or mortgage payment, groceries, and entertainment
• Setting realistic limits for each category
• Using a budgeting app or spreadsheet to monitor your progress

Adjust your budget based on the circumstances. You may have a significant unexpected expense, such as a major medical bill.

Step 2: Trim expenses (It’s not that hard.)

Start by reviewing recurring expenses and looking for ways to eliminate them. This includes:

• Canceling subscriptions that you don't use
• Shopping for better insurance rates on your vehicle, rental or home
• Switching internet and smartphone services or negotiating lower rates from your current carrier
• Changing spending habits for meals, beverages and other daily items

Step 3: Start or grow an emergency fund (You’ll need it.)

“Expect the Unexpected” with an emergency savings account. Aim to save three to six months of living expenses in a high-yield savings account. Tropical Financial offers CDs and tiered-rate money market accounts. To get started:

• Set a specific 2025 savings goal, such as $3,600. That’s $300 a month
• Automate your savings with regular transfers from your checking account. Tropical Financial makes it easy with its Daily Rewards Debit checking account linked to a savings account
• Shave expenses and redirect that money to the emergency fund
• Take advantage of windfalls like tax refunds, financial gifts from relatives, or an inheritance to accelerate the account’s growth

Step 4: Stow your credit cards (They cost more than you think.)

A recent study by the ABC Banking Journal shows members of Generation Z (ages 18-27) are more likely to say they are saving to pay down or pay off debt. Credit card balances, for example, are the biggest obstacles to meeting your financial goals. If you carry a $2,000 balance on a credit card with a 24% APR, you’ll pay $480 in interest over 12 months. Lower your card costs and maybe improve your credit rating in the process by:

• Ranking your card debts by balance and interest rate
• Putting the largest monthly payment toward the card with the highest interest expense
• Talk to a Tropical Financial loan officer about consolidating your debts into a personal line of credit or loan. It will likely have a much lower interest rate.
• Ignoring card come-ons sent by text, email and social media

Step 5: Save for retirement (Now? Yes.)

You’re in your 20s. Retirement feels like it’s a half-century away. If you start now, you can stop working earlier and enjoy more time traveling, dining out, and relaxing. If your employer offers a 401(k) plan, contribute at least enough to receive the full company match. If you can set aside more money, consider a Roth IRA. It allows you to invest after-tax dollars that can be withdrawn later tax-free. Here’s what else you can do:

• Increase your 401(k) contribution by 1 to 2 percentage points
• Set up automatic deposits to an IRA. Before opening an account, find out whether your contributions are tax deductible. They’re not if your employer offers a retirement plan.
• Educate yourself on investment options

Step 6: Invest in your future (with a skill that pays)

Earn a certificate or an advanced university degree that qualifies you for a promotion, a better job, or a side hustle. Your options include:

• Earning a certificate or master’s degree, preferably paid for by an employer
• Learning a digital skill related to your field
• Improving your public speaking and writing abilities
• Networking with professionals in your field or desired industry

By 2026, you’ll see the results of your efforts. Your savings will be in better shape, and you’ll be on your way to a healthier financial future.