Finance Tips Everyone in Their 20s Should Know
Are you a twenty-year-old who just started making money? That’s great! You may be at the top of the world right now but it is time you realized the importance of financial management. The whole world, your family, your friends, and even your teachers ask you to make money but what they don’t tell you is how you should manage the money you earn.
Advice is thrown around casually, but when it comes to money matters, nobody tells you what you are supposed to do. Fear not! We are here to assist you. We know how daunting it is to have money but no idea how you should manage it. Your twenties are a very crucial time in your life as you are now inching towards becoming an adult and are probably making the first steps towards a life of good decisions.
To help you make the decisions you need, here are some tips that you must focus on:
Open A Bank Account
Imagine owning a bank account. Sound exciting right? It is not only exciting but it is also a great way to keep a check on your finances.
Having control over your finances is the most important thing you need to do. There are several different types of bank accounts that you can open. If you are a student and currently enrolled in a program, you can go for special student bank accounts. These accounts are mostly free to open.
You can also go for a savings account. This should be your biggest priority as it might even help you earn a return on your money. It may not be a very big amount but hey, every dollar counts.
We’ve all been there, standing in front of a shop, looking at our favorite object and fighting an internal battle of whether or not we should buy it. We shouldn’t. Well, if you can live without the object and will have no harm, then perhaps, it is best if you don’t waste money buying it. 52% of the American population is found to spend more money than they earn. This happens because we live in a capitalist world and consumerism has forced us to buy things we might not need.
It is very easy to lose your money to urges that you cannot control. This is no excuse. You need to make sure that when you go shopping you have a distinct list in mind and do not stray away. It is only in your best interest to avoid overspending.
When you reach the age of twenty, the world expects you to be mature. The most mature thing you must do when it comes to finances is to pay your bills on time. The moment you get your salary handed over to you, you should start thinking about paying off your bills.
You may be wondering what’s the rush? Well, there are numerous reasons why you must pay off your bills the first thing. Here are some:
- Late Surcharge
If you do not pay your bills on time, you might have to pay a surcharge. That only means more money will be coming out of your pocket. Why procrastinate when you can pay your bills on time and avoid paying the surcharge.
- No Money Left
If you leave your bills for the end of the month, you will be making a very rookie mistake. There is no guarantee that you will have enough money left to pay off your bills. If that happens, you will end up pilling more and more bills, crumbling under them. Why stress yourself when you have the option to pay off your bills on time.
Keep A Financial Diary
Do you lose track of money spent? Well, it is very common for people to forget what they spent their money on. This leaves them panicking by the end of the month when they hardly have a few dollars left to their name. To prevent this from happening, you can keep a financial diary on you at all times. Every time you make a purchase, note it down.
It does not matter if the purchase is small or big. You must note it down. If keeping a diary is not feasible for you, and you are what they call tech-savvy, you can download an application and track your finances easily.
Budgeting Is Important
When you make money, you must also know how to spend it. Sit down before the start of every month and list down all the financial priorities you have. It is essential that you know what your priorities are so you spend your money in the right place.
Once you have all your priorities listed, allocate a budget for each. What is more important than making a budget is to follow it. It will be of no use if you design a budget but fail to follow it.
People who are under the impression that they have their whole lives to save money are sadly mistaken. You never know what calamity may befall you, which is why you should be prepared for every rainy day. Start saving money from the very first salary you get.
No one is asking you to save half of your salary each time, but 20% of your total income will do the job. When the time comes, you will be grateful that you made the wise decision of saving money.
(Acorns.com is a great app to help you start saving early. Click this link to check it out)
Invest In Lucrative Options
Do not let your money go bad in the bank. If you see a lucrative investment opportunity, take a leap of faith and invest your savings. However, it is very important that you do your research before coming to any decisions. Do not make the mistake of putting all your eggs in one basket. Scatter your money into different investment opportunities so that even if you face a loss it is not a big one.
Check Your Credit Score
You may not know what a credit score is, that just means that it is all the more important to learn about credit score and make sure that it is as it should be. A credit score essentially means your ability to get loans and what rates you would be expected to pay. If your credit score is better than most people’s, you will be able to land loans just the way you want them.
Get Life Insurance
Let’s be real here, we are all mortals. Surely you don’t want to think about death at this stage of your life but it is best if you do. You will most definitely need life insurance further down the road of life. To get the best deal, apply for insurance at the prime age of 20.
Get Expert Finance Assistance
If things are becoming too difficult to handle on your own, do not suffer in silence but get help online. There are many personal financial advisors who can help you make the best financial decisions.