People in their 20s, often never think about financial planning. Their immediate priorities include travelling, experimenting cuisines, spending their evenings with friends in cafes and bars. In all of this, financial management and planning often takes a backseat. While you may feel that 20s is too early to think about such things, getting started early is the key to financial success. You need to learn skills to manage your finances as early as possible to help yourself to be financially independent. It doesn’t matter whether you are a student, doing a part time job, or you’re employed. All you need to do is keep these four things in mind to ensure you’re financially independent.
In this article, we’ll discuss how these four things will you help you with financial management in your 20s.
When you have money in hand, it is imperative that you spend it wisely to fulfill your needs, as well as your wants. Along with that you also save enough to secure yourself and your loved ones financially. Creating a realistic budget will give you clearer picture of your earnings and expenditures. List down your income and all your expenses. And then plan your budget. Doing this monthly will not only help you to keep track of your money but also help you be careful while spending.
If you always end up using your card beyond the set limit, then it is time you need to be more prudent about using it. You’ll be able to keep debtaway if you stop carrying your card everywhere with you. This way you can curb your expenses and not be burdened by long, delayed credit card bills. Also, managing your finances and paying your credit cards bills on time can reduce the burden of debt.
They say ‘money can’t buy happiness’. But, money can buy you materialistic happiness. You would have some goals to achieve in the future. You may want to buy an expensive car, a lavish bungalow, or go on a world tour. But, all these dreams won’t turn into reality if you won’t have enough finances to support them. You need to start early and save enough to be able to buy a car, a property, or go on a world tour. Start investing and saving. Whatever the end goal, a financial advisor can help you create a doable plan, clear all your queries, and inform you about the risks if any at the earliest.
As soon as you start earning, you must clear all your previous debts and then start saving. Debt can take a toll on your financial status. As time will pass, the interest will also increase, and if you haven’t kept some amount aside to repay your debts, it will keep getting difficult. For instance, if you have a taken a student loan, you need to clear this debt first. Students loans are usually in the range of 5-10% and often are tax deductible that can lower your effective rate. So, clearing your debt first and then start saving will help you attain both short term and long term goal. The earlier you start, the more you save.
Managing finances in your 20s is a big task. With so many expenses, money just slips through hands like sand. But, with the help of a financial advisor you can manage your finances effectively. For more tips on how to be financially independent, contact us now.