The twenties are a time of experimentation with both life and especially money as we become more independent and learn the role it plays in our life. Amidst all the learning and new experiences, financial goals can seem something for old people and therefore nothing to worry about. However, learning how to save money and manage it in your twenties can vastly improve your financial health later down the line.
Money at no point in a person’s life should be neglected, the thought of dealing with it later on in life is something that can potentially ruin personal financial wealth. The following money tips will teach you the basics of how to deal with money ideally within your twenties, but also at any stage in your life. Find out more about how money management will help you utilise your earnings to their maximum potential.
Finance Crash Courses
The hardest part about money is learning how to manage it and all the things that need to be done to stay above the law regarding tax etc. This steep learning curve is enough to put anyone off, but if you can save money and learn about how to manage it for free you are at a significant advantage over your peers who were scared off at the idea. There are plenty of sources of information on the web via YouTube and government websites, so start by looking online to understand the basics if you didn’t study it at school.
Honing your Focus
During our twenties it seems like there is a limitless number of options for making money, either in the form of property, shares, stocks, numerous part time jobs etc. Which are the myths and which will actually make you richer?
Once thing to realise in your twenties is that time is your most valuable asset, therefore it should be spent wisely. You can take all the risks you want and recover relatively quickly and still have plenty of time remaining to not let it affect you in the long term. Young people should invest in themselves by learning and following their passions either for their career or on a side business. The key to maximising your potential earnings is by trying it all. This is especially true because you have much more control over your time than you do the stock market for example.
Avoiding Bad Financial Habits
We all want that new car or our income to buy the latest fashion trends or newest smartphone technology, but having the latest gear each year results in bad financial news for you. Most of us get caught up spending the money we have due to social pressure to be seen with the latest gizmo. Living from pay day to pay day in your twenties may accustom you to living like that and if not corrected, this terrible habit could follow you into your thirties and beyond. Learn to put money aside for a ‘rainy day’, so you have some financial support if things do hit the fan. This also applies to avoiding credit card debt to fund your lifestyle too.
Instead spend some time thinking about what you want to achieve financially in the long term and adjust your spending to suit. Things you should be thinking of are:
- What is important to you, what are your goals and what must you sacrifice to achieve them?
- What lifestyle do you desire and how much money do you need to make it happen?
Superannuation can be one of the best ways to get ahead in your finances so learn as much as you can about getting a better deal, along with ensuring you fight for the best rates on large debt such as mortgages, insurance and mobile phone plans.
Naturally, risk is something that comes with all large investments but without risk you are unlikely to reap great reward, so be willing to evaluate risk thoroughly on any investment you make and do not simply invest because Clive down the pub told you too.
Balancing Lifestyle and Saving
The best way of mastering this skill is to set goals early on to provide some stability and direction in your saving behaviour. These goals take the brainwork out of whether you should be spending or saving that $500 bonus you just received for example. If you are useless at saving money then try using a mobile app, a family accountant or another means to keep yourself on track. If it helps to set up a different bank account for each activity then try that also e.g. bills, rent, emergency fund, investing and saving accounts.
Renting or Buying
The age old question is do you stay home, save up enough money and then try to buy a place or move out, rent a property and be independent. Fortunately there are many pros to both alternatives and it will depend on the individual. Buying a house is not necessarily the best option nor is throwing rent away as dead money.
The decision should be looked at from a different angle; what opportunities, costs and alternatives face you in either path? A good example might be renting in a good location because of your work arrangements or buying somewhere because you prefer stability. Most of the time it could boil down to the fact that you can’t stand living at home any longer. Ultimately, if you do decide not to move out then plan an aggressive saving goal so you reach your target as soon as possible.
Finally, if you have any tips or advice that you would like to share with the Buckscoop community, please feel free to slot it in the comments section below, it only takes 1 minute.