Who says you have to be broke in your twenties? By managing your money correctly you can start setting yourself up for financial success in your twenties! Keep reading for 20 life changing money tips for your twenties.
There are a lot of ways to better yourself when you are young (like these 18 ideas) but setting yourself up for financial success is arguably the most important!
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Money Tips For Your Twenties:
Tip 1) Budgets- make them and stick to them!
You absolutely need to have a monthly and annual budget. And then you need to stick to it! There are so many apps and websites that make this so easy. They can even link to your credit card to tell you if you are going over certain parts of your budget!
Tip 2) Try to minimize debt when you are young.
The sooner you pay off debt the sooner you don’t have to worry about it. Of course the sooner you pay it off the less interest is added up and you ultimately pay less as well.
Tip 3) You need an emergency fund.
Emergency funds are something you don’t want to think about but as we have seen in 2020 they are essential. Things like a pandemic are completely out of your control! So have an emergency fund with ideally 3 months minimum of living expenses saved up.
Tip 4) Understand your taxes better.
This isn’t a fun one but the better you understand taxes the better off you will be! So watch a couple videos or read a basic personal taxes book The knowledge you gain will serve you well over your lifetime.
Tip 5) Learn the cost of time.
Ever heard how time is money? It’s so true! Learn the value of your time- is driving to your vacation to save $200 in travel costs worth taking two extra days off work? No probably not. The sooner you learn that time is money the better you will be in the future when life gets even busier.
Tip 6) Use credit cards wisely.
This is a common piece of advice but still so many people don’t listen to it. Credit cards are good for somethings! They help your credit score when used correctly, they can have great perks, and they are safer than cash or debit cards. But if you abuse them then they can ruin your financial future. I strongly recommend only using a credit card if you can pay off the balance bi-weekly!
Tip 7) Cook and make your coffee at home more.
This isn’t a fun tip but cooking meals when it isn’t a social event and making your morning coffee at home can help you seriously save so much money. Get a nice coffee maker (like this one) and it will pay for itself quickly by not paying $5 a day for Starbucks.
Tip 8) Cars- know the worth and costs.
I know way more twenty-somethings than I can count that have bought a car that is out of their budget. Unlike other expensive purchases (like a house!) cars depreciate rapidly. And by getting a car more expensive than your budget you increase other costs like insurance and repairs. There can be tons of hidden costs to a car so be prepared for that.
Tip 9) Let’s chat insurance.
Insurance is not just for older people! You need to get life, renters, health, and car insurance as soon as you are an adult. You could set yourself up to be financially destroyed if an emergency happens and you don’t have the proper insurances.
Tip 10) Get your financial files organized.
As soon as you get your first job you need to start keeping track of your financial documents. I recommend doing this digitally as much as possible because you can create backups with ease and don’t risk losing documents in a move! Make a digital filing system that works for you and update it every 6 months.
Tip 11) You are never too young to start building credit.
The earlier you start building your credit the better off you will be when you actually need your credit. Start with the basics such as using a credit card but paying it off bi-weekly! Remember these money tips for your twenties are focused on helping your financial health be better for the future.
Tip 12) Always pay your bills on time.
Not only is this just an incredibly good habit to build but not paying your bills on time will quickly destroy your credit score and can make it hard for you to rent in the future. If possible set up as many automatic payments as possible to avoid this issue!
Tip 13) Start saving ASAP.
The sooner you start saving money the sooner those savings accounts can start to grow. I recommend trying to put aside a set amount of your paycheck every time to go into savings. By making this a habit you stop planning to spend that money and it gets easier and easier to save more!
Tip 14) Consider investing when you are younger!
Investing is a big decision and involves research but if you are in a financial situation where investing makes sense then start to research it! If you are able to successfully start investing in your twenties you could end up with a lot in the end when those accounts exist for years/decades.
Tip 15) Learn what your financial priorities are.
Want to buy a house before 30? Want to retire at 55? Want to travel abroad annually? You get to chose your priorities but the sooner you know what matters the most to you the sooner you can make financial plans that make those items your priorities.
Tip 16) Pay off your high interest debt first.
The higher interest the debt the more important it is to pay off. So make a debt payment plan so that you can pay off those higher interest debts first. Usually a car payment is higher interest than student loans. And even within student loans there is differences- private loans are usually higher interest than federal loans.
Tip 17) Don’t worry about keeping up with your friends.
Everyone’s life path is so different! So don’t sweat it if your friend already bought a house or bought a nice new car. If you spend all your money trying to “compete” with your friends you will be hurting your financial future and in the long run it’s not worth it at all! Live within your budget and don’t worry about what others are spending their money on.
Tip 18) Start saving for a down payment.
If you plan on buying a house within the next 5 years than the sooner you start saving up for a down payment the better. So start setting up a specific account for saving towards that so that you can easily track your progress.
Tip 19) Make sure you and your partner are on the same page.
Even if you aren’t married and aren’t near it you still should ensure that you and your partner don’t have any major financial opinion differences that you can’t get past. Once you are serious with a partner it’s important to also have those tough talks about what your financial future together looks like!
Tip 20) Don’t forget to have fun and enjoy your twenties!
Lastly, don’t forget to have fun! You are young and you still need to have fun. Be smart and make good financial decisions but don’t let saving money obsessively ruin your life and stop you from enjoying your youth. These money tips for your twenties are helpful and important but don’t let money control your happiness.
So start implementing and thinking about these life changing money tips to ensure that you have solid finances now and setting your future self up for financial success!
These money tips for your twenties will be worth making sure you do when you have great financial health later in life.
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