Have you started planning personal finances and saving? There is no age that is too young for that. These six steps will contribute to your well-being.
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Smart Money Moves to Make in Your 20s
You have just graduated or are still finishing your studies, however, it is already time to think about financial matters and developing useful money-related habits. The earlier you begin, the more grateful you will be when you turn 30. It does not mean that it is time to dive into learning what is FX trading and stocks (which is useful in any case), you can start with the below simple steps that will contribute to your future wealth.
1. Say NO to Credit Cards
This is undeniably a convenient way to get money on everyday expenses fast. However, this habit to spend more than you have or earn will lead you to the trap. Now, you may have only a couple of hundreds of debt, however, later, it can increase dramatically. What is more, you should remember that lending makes sense only when you need something significant you can’t afford now, i.e., a house, car or education. This is one of the main strategies to implement in life — no living on credit.
2. Start Saving an Emergency Fund
Situations like illness or a car accident happen at any age. Something can be broken or stolen. Not always it is possible to rely on insurance, hence, own finances will become a way out of a complicated situation. Probably, now, the amount is meagre, however, the habit to save on emergencies will remain.
3. Plan Your Expenses
Almost every article on financial well-being will describe investing as the tool to earn on the exchange market, as well as annual and monthly planning of personal finances. The earlier you learn to budget, the more effective it will be. First, analyse your expenses and check which of them can be easily avoided. Make up the list of all the necessary monthly payments like rent, paying off the student debt, nutrition and commuting, etc. Make sure that a certain amount of money is monthly saved to an emergency fund. If after planning the budget some money is left, include entertainment and check if something else can be saved.
This is a painstaking process that requires effort. Even if you fail to stick to the plan this month, it does not mean that you should give up. In a couple of months, you will develop this habit and will be happy to know that you are deciding on how your money is spent.
4. Start Saving on Retirement
It seems that you are too young, however, the earlier you open an IRA or 401(k), the lower monthly payment will be. Besides, the revenue from this account will be higher due to a longer period. When you reach the age of retirement, the amount on your account will be higher in comparison to those who have opened their account later and even saved more each month. Besides, you will get the chance to retire earlier once you reach the amount of money you consider sufficient.
5. Become Financially Educated
You could consider doing a business school like the Warrington College of Business to become financial specialists. Otherwise, it makes sense to learn accounting and financing. It does not mean that you should become a broker. There are plenty of free or budget-friendly online courses that will help. First of all, this is a contribution to handling personal finances. Secondly, knowing more about money and finances will help you with the private business if you decide to launch one. After all, you may want to invest in Forex trading in 15 years. This knowledge will become valuable.
6. Save for a Real Estate Down Payment
No matter what your plans for the future are. You may plan to have a family or not, however, having your own place to live is a great asset. Once you have learned how to save for emergencies and retirement, it is time to think about acquiring own house or apartment. Even if you are still paying back your student loan, it is possible to negotiate acceptable terms for a mortgage loan. This is when the ability to plan finances will come in handy.
The ability to responsibly and effectively handle personal finances can be called a talent. To a certain extent, it is. However, this skill can also be developed. Start planning and saving right away, and by the age of 30, you will see the results in the wealth you have managed to grow.
