We have all heard the phrase, “Time is money,” but how many of us actually consider the value of money in our 20s? Managing your finances on your own can be a stressful challenge, especially at such a young age. However, your 20s do afford you the convenience of time. Money grows overtime when invested correctly. That is why making a financial plan will better prepare you for a brighter future. If you are in your 20s, we recommend considering the fifteen financial tips for young millennials below.
Financial Tips for Young Millennials
Set goals. Make a list of financial goals, such as buying a house, retiring early, or taking a dream vacation. Write them down and determine how much money you need to save to reach your goals.
Make a budget. Determine your monthly expenses and calculate a spending budget. Begin by paying off any existing bills before taking on new expenses. Furthermore, make sure your credit card payments do not exceed 20 percent of your net income.
Save for emergencies. Financial advisors recommend having an emergency fund that equals 3-6 months of living expenses. This will keep you afloat if you become unemployed, injured, or sick.
Save 10 percent. You should save up to 10 percent of your gross income. Spread it out among your emergency fund, financial goals, retirement, and general savings. If 10 percent seems like too much, start with whatever amount you can. The important thing is that you save. In addition, check with your financial institution for services they offer for financial planning.
Get insurance. You need to purchase all the necessary insurance coverage for your life, home, and family. That includes health, disability, homeowners, auto, and life insurance. In addition, avoid purchasing insurance policies you do not need, especially in your 20s.
Start investing. Once you have set up a savings and emergency account and have saved some money, you should begin gradually investing. Investing your money overtime consequently helps you build your savings. Click here to speak with an investment advisor.
Plan for retirement. Most people in their 20s do not bother thinking about retirement. Starting to save now can drastically improve your financial situation in the future. Saving while you are in your 20s is ideal because you have fewer expenses and can consequently put more of your money aside for later. Consider opening a 401(k) account with your bank today.
Build your credit. Having no credit is almost as bad as having poor credit. You should apply for a credit card with a small spending limit and begin working to pay that off. This will help build your credit history and improve your credit score.
Break down your goals. Write down a list of short-term, midterm, and long-term goals you want to accomplish. Planning for your goals allows you to make wiser financial decisions presently. Consider where you want to be, or what you want to have a year from now. Then perform the same task considering 5, 10, and 20 years from now.
Switch to cash. Forcing yourself to carry cash makes you adopt a more responsible lifestyle. Paying with cash instead of swiping a credit card makes you think harder about your financial decisions because you may be more aware of how much you are spending. Therefore, it is more difficult to get into debt.
Save your financial statements. Always save your financial statements and files so that you can prove your expenses and earnings. Finally, create an organized space for arranging your financial records over the years.
Free your parents. Your primary goal during your 20s should be to become self-sufficient. Therefore, it is important that you get started as soon as possible.
Be professional. It is time to leave your college life behind. Your social media activity can be seen by everyone from your boss to your future employer. Go through and check up on all of your social media posts so nothing inappropriate can be seen by your employer, coworkers, or customers.
Your 20s are a time to learn and grow. Having a financial plan will help you get the most out of this great time in your life and prepare you for the future. Consider making a financial plan now so that you can be prepared for later by following these financial tips for young millennials.
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