At 20-something, you may experience a very difficult time financially. You are struggling to establish yourself and build your career but financial problems keeps pulling you back.
If you would like to get the most out of your life and have a smooth financial ride now and later, here are the top 5 financial tips for 20 somethings.
1. Extra income
You can decide to pick up a side job. There are many opportunities out there. Be productive and earn an extra income which will help you reduce your monthly expenses. You will also be able to adjust your budget accordingly by just utilizing a few hours of your free time on a weekly basis.
These days you can market your services from home and make money. The advancing levels of technology can help you to achieve your financial goals.
Whether you are a skilled individual, creative, a talented writer, web designer or a marketer, there are a variety of opportunities waiting for you online. You will be able to make a good amount of side cash that can offset a percentage of your monthly expenses.
Sites like Upwork, Fiverr, WriterAccess and hundreds of thousands of online platforms are dedicated to creating opportunities for users to work from the comfort of their homes, based on various skill sets and categories. You may as well find other means of maximizing your income through other side jobs.
2. Draft A Budget and Stick to It
A personal budget will help you determine the amount of money you have as well as your priorities in life. A strategic financial plan means much more compared to working or gathering as much income as you can. It’s all you need to gain confidence in your finances. Creating a personal budget is simple, but the real test involves sticking to the budget.
You must always stick to your budget or else, it can be your financial pitfall. You should start by identifying all your monthly expenses and then take control of your expenditure.
A detailed tracking will allow you to make the right decisions on what you should cut back and even how to create an effective budget. We are a generation of technology savvy. You can access the internet and search for budget apps.
These apps can be used to create or modify budgets in an automated and straightforward way, allowing you to take control of your spending. Moreover, there are millions of financial advisors with great blog contents. Read their blog posts and learn how you manage your finances.
3. Investment advice for 20 somethings
To be successful in life, you must use money to make more money. Most people think that investments are simple in nature. Some even expect that you can just visit a specified web address, create an account, fill your personal details and then start making money by trading. Unfortunately making an investment is not quite that easy.
To be on the right track, start with the basics. Gather information through an in-depth research and create a knowledge base about investments.
You can get all the necessary information from the internet or various books and start investing once you feel that you are well versed with how the stock markets work. This way, you will likely get good returns from your investments.
4. Live Within Your Means
Most people use credit cards to make purchases more often compared to real money or cash. Credit cards are not bad but just use your credit card wisely.
There are stages in life where debts are helpful if used in a smart way. As a young professional in early stages of your career, you can use credit cards to buy a few work outfits or some cheap furniture for your first apartment.
You should be aware that when you purchase anything on credit, you are spending your future income. Try to survive on less than you earn.
If you are not able to repay your credit balance within the next three months, then you are living beyond your means. Repaying your credit on the basis of minimum monthly balances will lead you to a situation where it’s progressively difficult to clear your debt.
It’s time you rise and take control of your debts. Come up with a debt repayment strategy. Consolidate all your debts under one umbrella or organize them in order of their interest rates and start paying off the ones with the highest interest rates.
Always ensure that you settle your loans and debts in time, on or before the due date. Defaulting on payments can affect your credit score, and you should avoid it at all costs.
5. Open Savings Accounts
Your financial dreams such as buying a house, luxury car, traveling around the world and more must be put on hold. Savings will help you achieve your financial goals. At least 10% of your income should go to your savings account.
It will grow with time, and you will be motivated to increase the percentage. Open a high-interest savings account to earn extra money through interest. Save half of any bonuses or benefits you receive in form of cash, before they can become part of your monthly budgets.
These days, a few jobs are stable. Think about what you can do if your job disappears unexpectedly. The best way to deal with this situation is to set up an emergency fund account. If you are single, ensure that your emergency savings are approximately three times your monthly expenses. If you are married, it should be about six times your monthly expenses.
I understand that savings can be difficult, especially when you are getting established in your career and at the same time, paying the student loans.
At this stage in life, you must also be thinking about the major purchases such as your first home or luxury car, and this can only be achieved through savings. Just incorporate savings into your monthly budget before you can be accustomed to spending the whole income.
The 20s can be a fun and wonderful time in life. To have even more fun, it is important to plan yourself properly financially. Use these financial tips for 20-somethings, and you will not only enjoy the 20s, but also the rest of your life. The choices you make now will determine a lot about your future.
What are some tips and tricks you use(d) in your twenty’s? List some below.