Your 20s can one of the most memorable times of your life. After all, you’ve just started to enter the workforce, have little responsibility and finally have a disposable income to call your own. However, even with all the freedom that youth provides, it can come with some significant financial consequences that can be crippling if you’re not careful.
To anyone just starting on this journey of adulthood, here’s the financial advice I wish I’d had—or followed—way back when.
Don’t Spend Half Your Income On Socialising
Millennials have made it a trend to catch up with their friends at expensive restaurants and bars. While it is alright to spend money on an amazing meal once in a while, don’t make it a habit to eat at expensive places twice a week. Money spent on socialising appears to be spiraling out of control in the case of many, and they need to start cutting back to save a huge chunk of their money
Make A Budget And Stick To It
When you have a budget, you can differentiate between your wants and needs. For example, paying rent is a need. But buying that expensive red dress that you might wear on an undecided occasion is a want. Without a budget, you risk undersaving for important purchases and overspending on discretionary items. Every investment has its highs and lows, but when you’re young, you can enjoy the highs and ride out the falls. If you’re not very good with money, get professional advice on how you can invest wisely so you get great returns when it’s finally your time to
Start Saving Early
The easiest way to secure and improve your financial future is by saving early. You might have student loans and other debts to pay off but that doesn’t mean you can’t set aside a small amount every month for investment purposes. You never know when you’ll need money in the event of an accident, which is why you need to start saving as soon as possible.
Never Buy Things You Cannot Pay For Immediately.
When you first get your hands on a credit card, it will be very difficult to control your impulses. Good things you see your friends using will tempt you to buy, but try to be content. You can eventually buy the good things in life when you accumulate enough to pay it upfront and in full. This includes vacation travel as well; you’ll have plenty of time later when you have saved sufficient money. Use your credit cards wisely and pay off the entire balance each month. If you cannot pay off the balance, don’t use the credit card.
Start Saving For Life Events
Stop impressing your girlfriend or boyfriend, don’t shower them with pricey gifts or dinners. You probably don’t need a brand new car and a big house to live in. Until you have family and kids, you must live frugally to save for big occasions such as marriage, child birth, kids’ education, etc. It is generally a good practice to have separate accounts for each such future life event and set aside money from each paycheck.
Don’t Rely on a Single Source of Income
Learn different ways to earn so you’ll always have money coming in. That way, you’ll be assured to have money to spend for your needs, at least.Make extra cash by offering your talent, skill, knowledge, or even your hobby to others. You can even earn while working from home.
Don’t Buy A Car Just Yet (even if you can afford it)
A car though convenient is not the best thing to buy while you are still in your early 20’s. It is not a very good investment unless you buy one for commercial use.Cars are depreciating assets, this means that as soon as you drive off with it after purchase, it’s automatically worth less than what you paid. Not only that, but cars are expensive to maintain with fuel, insurance, maintenance etc.
Stay Out Of Debt
Having too much debt is always bad. Avoid credit card debt. If you need a credit card to buy something (especially if it’s a non-essential item), you probably shouldn’t buy it. If you do use a credit card, it’s best to pay off your balance in full each month.
Being young, you probably take your health for granted. But know that eating junk food, smoking, and drinking excessively can cause serious problems in your later years, and can lead to a heavy financial burden. Take steps to maintain your good health always.
In summary, make sure you start doing these 8 smart money moves in your early 20s.Following these money advice will help you achieve financial security.