As much as it might seem like your 20’s is the time in your life where you can make mistakes, spend your money whenever you feel like it, and simply rest on the fact that you’re “too young to know any better,”
As much as it might seem like your 20’s is the time in your life where you can make mistakes, spend your money whenever you feel like it, and simply rest on the fact that you’re “too young to know any better,” the arguably best decade of your life doesn’t have to be so nonsensical and unwise. You can definitely still have fun while taking care of your financial situation on the side. There are just a few healthy habits every 20-something can develop that are painless and just downright smart and will lead to a lifetime of benefits. Now is the time to create a financial foundation that most people don’t even begin to think about until they are almost 40. The following financial habits are comprised of some of the best advice I’ve ever been given as well as some top-notch tips I’ve gathered from doing a little research. So give me 10 minutes of your time to change your life – then you can go back to having a blast.
- Invest in Your Career
Kiplinger.com advises 20-somethings to first make the money that you will be working to save. Think about the big picture and get the education or training you will need for a career now. It may be hard to think of work beyond just a job, but envisioning your work in your 20’s as the beginning of your life-long professional career will change the way you view the work you do now. You may be on a starter salary fetching coffee or answering phones, but now is the time to be proactive in the workplace, network and make connections, learn as much as possible, and develop your craft. Start to set yourself up so you can open the doorways to a higher position, earning more and feeling more fulfilled later on down the line. (http://www.kiplinger.com/article/saving/T063-C006-S001-10-financial-commandments-for-your-20s.html)
- Get Health Insurance
Though now you have to according to new laws enforced this year, it is always wise to pay a little now to protect yourself later on. If a crisis occurs later on, you won’t have to shell thousands and thousands of dollars out of pocket for something insurance would easily cover. This tip is crucial. Plus, having insurance that gives doctor visits for free or with a low deductible will keep your body healthy so no problems accumulate and you can spend your time in the workforce making money. (http://www.kiplinger.com/article/saving/T063-C006-S001-10-financial-commandments-for-your-20s.html)
Head to your bank and open a savings account if you don’t already have one. Whether it’s a little bit (like 10%) from every check you receive or a monthly deposit of just $20, make adding to your savings account an unconscious routine. Framing your savings this way will prevent you from even starting to think about how to spend this money from your paycheck. You can view it in your mind as a mandatory bill – for yourself. Plus, as your funds increase, so will the interest. It’s important to have a savings for things like a future home or an emergency reserve, or even to leave it there to grow your money for future investments.
- Debt Repayment Plan
This one also comes from Kiplinger, and I’m sure glad I found it. I didn’t take your average college after high school path, I got right into a career. However, most of you have attended university and have some form of debt. Until this country comes up with a better and more affordable way to educate its citizens without crippling them with debt, it’s best to create a plan in tackling this debt and, more importantly, sticking to it. This advice also works for any young and uninformed credit card debt you may have at this age. Moving forward with no set plan is no way to get rid of debt, so talk to a financial advisor at your bank, your parents, or a good friend who is responsible with money to get the best payment plan set up. All of my best advice has come from asking for advice from other professionals I look up to.
- Plan for Retirement
The earlier you start, the better. Many of you have a 401k established through your job. However, for freelancers like myself, many don’t. The best thing I ever did was to seek out a friend of mine through work and get some monetary advice. She advised me to set up a retirement fund. At the age of 23, I investigated and created an IRA account for my own retirement. My bank guy (that’s the official title, by the way) said I was the youngest person he ever dealt with, and I was happy for that. Even if it’s a couple hundred bucks or a few thousand, every year it helps to do this. My account is also invested in the stock market rather conservatively. Each year, the amount of money it can make will fluctuate, but over the years, your funds will greatly increase if they are diversified in the market. The sooner you start, the more you’ll have later. Not to mention, IRA accounts are a deduction on your federal income tax return! Not only are you socking away cash; you’re reducing the amount you owe the feds every year. It’s a win-win.
Oops! Looks like I’ve included a bonus tidbit! Don’t worry, you can thank me later.
- Work Your Credit Card
I have been doing this trick for several years now, but I only recommend it to you if you are diligent about paying your credit cards on time and aren’t prone to overspending. I have two credit cards, one business and one personal. (This also makes doing your taxes very easy as you only have one card to review for expenses). Every single thing I buy goes onto a credit card that I simply pay off, in full, every single month. That way you can reap all of the wonderful benefits that credit cards come with these days! Whether it’s cash back or loads of airline miles, I am constantly spending and earning simultaneously.
While there are probably a million other things you could do with your money, I have found that these 5 tips are the most foolproof and easiest to follow. Of course, it doesn’t hurt to limit the amount of credit cards you open and to force yourself to rationally think about large purchases (or hell, even small ones, like getting a ridiculous Starbucks drink twice a day), but I do believe that these tips will start you on the path to a life of financial health. Like these tips or have any others? Share with us in the comments.
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