Being in your Twenties
The 20s is an exciting in most people’s lives. You are young, energetic and you have are just starting your career. The future looks promising and you have every reason to be ambitious.
It’s also the time that you set the foundation to build on in order to achieve career success and financial freedom. Many of the financial decisions you make in your 20s impact your life for several decades to come. Learning how to manage your money in your 20s could be the difference between prosperity and financial struggles later in life.
You need to learn these money lessons in your 20s.
Make savings a priority
You must save a percentage of your income regardless of how much you earn. A common mistake many young people make is to live pay check to pay check without thinking about the future or an emergency case where they don’t have the reliability of a regular income. This also makes them miss out on the compound interest factor that works to their advantage.
You need to save a portion of your income every month as part of your investment goals and Emergency Planning. You should have some funds set aside for a rainy day.
Get financial education
Financial literacy is a skill that must be learned like any other. It’s unfortunate that the education system has little to offer in terms of financial education yet it’s one of the most important lessons one needs to learn in life.
Due to this costly oversight, you have to take it upon yourself to learn money management skills whichever way you can. You can attend financial literacy classes, seminars, read magazines, watch YouTube videos, and talk to your banker who should be a qualified financial advisor.
Take advantage of tax breaks
There are a number of tax breaks that many people miss out on because of lack of knowledge. A good example is the tax break that comes with saving in a retirement fund.
Many young people miss out on tax breaks like this because they think retirement is so far away and there’s no need to start planning for it.
Most employers also offer to match their employee’s contributions which further adds more money to your savings.
Pay your debt in time
Defaulting on your loan repayments even by a single day attracts a fine which makes the loan even costlier in addition to affecting your credit score.
Ensure you pay off your loans in good time and if you have a salary, have a standing order to have the loan automatically cleared just in case you forget.
The same applies to your utility bills, many of which also have penalty fees for late payment, in addition to the risk of your service getting disconnected.
Also, pay your credit card debt in time and try as much as you can to make all your payments in cash. Withdraw bulk amounts of money to last you for a given period of time and minimize your cashless transactions that usually have some fees attached to them.