When in your 20s, managing money isn’t easy. You might have various financial obligations, from rent to student loans, while lacking the salary to plan too much ahead every month. You also have to think about circumstances when you don’t have a job to fall back on, also cannot ignore retirement even though it may feel too far. Even if you don’t have to worry about loans or mortgage, you might want to splurge on a vacation or a car, but is it ideal?
Whether you are the saving kind or the spending kind, here are 10 tips that will make handling money a much easier task for you:
- Don’t let your salary get to your head
New job may require a new lifestyle, which can be quite pocket pinch. Some things can wait. Liz Pulliam Weston, author “The 10 Commandments of Money,” says one should live like a broke college student even though you are substantially employed. Living frugally will do you more good till you can get a better grasp at your expenses.
- Live at Home
It is not embarrassing and you certainly aren’t going to the first or the last or the only one. According to Pew Research Center survey statistics, a quarter million people on an average live with their parents’ homes. Living at home can give you a better grasp on your expenses, stabilize expenses, and plan your finances better.
- Use Credit Cards judiciously
Avoid using credit card as much as you can, those debts take no time to pile up and can pose problems if you are not earning a lot or just began earning. They are very easy to use and feel hassle free. Don’t forget credit cards carry high interest rates and fees, you have to make on-time payments. Keep them only for emergencies, when you are in a dire need to use it. If you want to use plastic money, debit cards are the best.
- Pay off every debt
Every card should be paid in full each month ideally, but that may not always be probable. If you’ve built up some debt, start paying it off now. LowCards.com CEO Bill Hardekopf suggests choosing the one with the lowest credit limit to pay off first when in a dilemma where to begin, since exceeding the limit can add on extra fees and also damage your credit ratings.
- Pay off your student loans slow and steady
No need to fast-track those payments, pay your loan back according to the monthly arrangement in your contract. That is, you should continue to make steady monthly payments for the duration of the life of the student loans. If it has an unusually high interest rate, or you have some money in hand to spare, paying off the debt should be your number one priority.
- Create an emergency cushion, urgently
Weston advises building up cash cushion- of at least $500 for emergencies. They can be anything from car repairs to medical bills. The goal is to have 6 months of expenses stored away, preferably in a bank account in case you lose your job. For 20-somethings who cannot build that emergency cushion right away, the plan can be a little more flexible one.
- Insurance counts
Make sure you have health insurance, vehicle insurance and yes, life insurance. It is all the more important if you are financially responsible for someone, like children. Destiny has no guarantee, a single accident or illness can destroy you and your finances if you’re not insured.
- Work towards long-term goals
Having big goals, such as purchasing an apartment or travelling around the world, could help you move towards them more systematically. When you get an early start on saving for a big goal, then you can take good advantage of compounding interest, thereby arriving at your goal sooner.
- Save. Think about your Retirement
May sound clichéd and just too early, but even though retirement seems like eons away when you are 20s,saving as soon as you get your first job eases your reach to your retirement goals well ahead of anything. If your employer offers contributions matching to a 401(k), then take advantage of that, too. Trust this, the other half of your life starts once you retire.
- Monitoring investments is crucial
Many people forget to invest well, balance them, keep checks on the fees they are paying or adjust their portfolios as they age and circumstances change. Result? Lost earnings and a lack of preparedness for the uncertain future, especially the day retirement arrives at your step. Check in on your accounts quarterly. Clarify with your financial services provider faqs you don’t understand, the fees or investment options or whatever little thing it may be.
When you start earning, you must think beyond the immediate present. Being careful with money pays off in the longer run and leads to overall greater satisfaction in life.