Think ‘save,’ not ‘spend’

A: When you’re in your 20s, you can take more risks because you have the luxury of time on your side. You can afford to ride out the market’s, bumps because you won’t be touching that money in the near future. With this in mind, some analysts recommend an investment portfolio comprised completely of stocks. This is designed for the highest risk tolerance investor with a long time horizon. Investors, with this kind of portfolio will look to achieve the highest return potential, but should understand that there will be the possibility for high fluctuations in market values.

With that said, go for it. You have time to make up any losses, and you have many years of earning power ahead of you.

Here are some suggestions :

• Think "save," not "spend." A budget will also help you set aside some money to save and limit your credit card use. Build an emergency fund of at least three to six months worth of living expenses.

• Pay down debt. Accelerating debt reduction is a must. Consider consolidating student loans.

• Join your employer’s savings plan. A big part of getting ready for retirement is participating in your company’s retirement plan. Join as soon as you are eligible. If your employer matches employee contributions up to a certain percent, take advantage of that by contributing at least that percentage of your own earnings.

And if you’re thinking about changing jobs, timing is critical. You might want to think twice about leaving your job before you are fully vested, or in other words, until you have been at your job long enough to take all of your retirement plan earnings with you when you go. A situation may arise where even when you fill out an application for an apartment, your credit report will likely come into play.

• Set realistic goals. Whether you wish to return to school, change your career goals, or buy a home in a few years, it is important to have realistic retirement goals because they will influence your saving and investing.

• Dump bad habits. Don’t be tempted to spend beyond your means. Getting your first job often coincides with buying a new wardrobe and can be closely followed by moving into a new apartment. Even a disciplined person could be tempted to spend, spend, spend.