The 20s are exciting years – full of hope, change and opportunity. It’s the time to explore, to make mistakes and to learn from them. It’s also a time where you may feel that if you don’t manage your money well, you will be financially lost forever. But don’t worry; here are a few suggestions to help you plan your finances in your 20s.
Invest in yourself
Before you think about saving money, you need to make money. Your first job is not going to be your last; make sure you learn the right skills to help you progress in your career, and not just your job.
Keep a budget
Once you start earning, money management is crucial. It’s very important to have a budget in place; without a budget, you risk overspending. Calculate your daily expenses and recurring monthly payments (rent, utilities, etc.); this will help you analyze and cut costs.
You’re an adult and protecting yourself is now your responsibility. Getting insured will prepare your for an uncertain future, like a trip to the emergency room or a fire in your apartment.
Make an emergency fund
Insurance will not cover all your problems. You still need to have liquid savings as an added layer of protection. An emergency fund will help you pay for things that your insurance won’t cover. An ideal emergency fund should have 3-6 months’ living expenses.
Manage your debt
If you have a credit card, make sure you don’t overspend and always clear your debts on time. Choose the right credit card as per your income, always meet your minimum monthly payments or clear your balance to avoid higher interest rates and penalties.
Start saving for your retirement
Although retirement may seem really far away, this is the right time to start saving for it. If you start early, your money will have more time to grow. Just a little bit every month will go a long way in ensuring you have a good retirement fund in place.
Stop relying on your parents
In your 20’s your main goal should be to become self-sufficient. It’s time to stop relying on your parents for your needs and wants. It’s time to build your own life, your own financial existence.
Financial planning in your 20s may seem like a daunting task. Here’s the good news though, you have time on your hands and this is probably the best time in your life to start planning your finances. Managing your money may seem overwhelming, but it has its rewards.