Credit to image used in pin goes to American Advisors Group. – Changes were made to the original image.
Your 20’s are a time of fun, experimentation, and an amazing amount of freedom. You’ve probably graduated from college, got your first job, moved into your own place, and began the first stage of your adult life. And what better time to start fulfilling your financial freedom than before you start having kids or even before you get married?
As exciting as it sounds, the decisions you make in your 20’s can have long-term effects on your finances for the rest of your life. More than just a time to explore, your twenties can offer a lot more.
So to get you started building a strong financial foundation in your 20’s, I’ve created a list of great ways to get ahead. They’ll show you how to have a comfortable and prosperous life while you’re still young. So check them out, and let me know what you think!
Live Below Your Means
Learning to live below your means is essentially the foundation of financial freedom. Spending less than you earn is a sure path to financial security.
Instead of spending more, focus on building your savings. Create a budget, see what expenses can be taken out, automatically deduct all the payments for each month, and deposit your savings. The money left can be used for your emergency fund. Be content and satisfied while living small, and you’ll be thankful in the future.
Increase your income
You’re young and probably have a lot of energy. So why not find more ways to increase your income and get on track for reaching your financial goals?
Have a side hustle, look for a part-time job, find creative ways to make money, start a blog or volunteer for overtime work. Whatever you’re good at, take advantage of it and make more money. Use the cash you can earn to pay out your debt or just add to your savings.
Impulse Spending & The 2 Week Method
Just because there are crazy sales happening at stores doesn’t mean you need to spend. Think the other way around and break the habit of impulse purchases. Practice waiting two weeks before buying something to know if you really want it or not. Many times you’ll find that after two weeks, you didn’t really want that outfit or purse.
The Snowball Method
The financial expert, Dave Ramsey, has a great debt paying strategy called the snowball method. Instead of paying off the biggest debt you have first, you throw any money you can at the smallest one while paying the others off with the minimum payment.
This may seem strange, but the idea behind it is that it gets you on fire and motivated every time a debt is paid off. Many people get discouraged when starting with the biggest debt (it feels like it’ll never be paid off), so you’re playing a mental game with yourself when doing the snowball method.
Also, to simplify your payments of the other debts or monthly bill, try automating them. This will save you so much time and can free up your mind from stress.
When you’re in your 20’s, you have a lot of years ahead of you. Now is the perfect time to start investing and take the risk. Start putting up a portion of your salary into high-interest investments or savings. The key to consistently ssetaside a budget is to make it automatic. That way, you’ll never even see the money you’re contributing and you’ll learn to live without it.
Think of the long-term goals; it may be hard now, but you’ll thank yourself for it in the future.
Find Ways to Save
Improve your finances by finding ways to save more. Whenever you can, take the public transportation instead of driving your car. Make things at home, whether it’s a coffee, lunch, or snack. Cut cost on your utility bills, subscriptions, and find alternative ways to enjoy yourself while living small. Change your spending habits and focus on your budget.
Mark Zuckerberg wears the same gray T-shirt every day. Why? Because he wants to focus more of his energy on important things in life than on small decisions like outfits.
I’m not saying that you need to do the same thing, I just want you to consider this as an idea. Minimize in your home, time, finances and whatever else will benefit you. Make more than you spend, and use the excess to invest wisely. Apply the minimalist approach and guard your wealth.
Don’t Neglect Your Health
Health is wealth. It may sound cliche but it really is a valuable way to invest in yourself. See your doctor when needed, eat healthy food, exercise, and stay fit. Whether you have an emergency fund or insurance, it’s always good to know that you’re taking good care of your body. This will reduce the risk of seriously expensive medical bills (whether now or in your 50’s).
Plan Your Retirement
Even though you’re still in your 20’s, it’s generally a rewarding strategy to plan your retirement now. Preparing in advance can save you a lot of stress and have compound interest work for you. The sooner you start investing for your retirement, the less you’ll have to think about it in the future.
The actions you make now can impact your financial success in the future.
I hope I was able to give you some inspiration and motivation to help you get started on wealth. Get in the habit of implementing these ideas in your 20’s (or whatever age you’re at right now), and you’ll start to see the benefits.
The earlier you start your financial plan, the better your chances are of having a financially secured future. So give them a try and let me know how things go!
What were some of your favorite tips on this list? Let me know in the comments down below. I’d love to hear about them.