Your twenties are a time of freedom, finding yourself, and establishing a routine. Believe it or not, many of the choices you make in your twenties can shape how you live later on in life. This is why it’s crucial for you to make smart decisions in this stage of life to set yourself up for future successes. One area to pay particular attention to is your finances.
Many people in their twenties can’t see far enough into the future to know what they need to do to help themselves financially as they grow older. With the right planning, strategy, and goals in mind, you can make the best financial decisions for you in your twenties to help you later on in life.
Below are some of the financial recommendations that can best help you in your twenties.
Consult a Financial Planning Advisor
When trying to figure out where to start making the right financial decisions, it may be a good idea to consult with a professional, especially since finances can be confusing when you’re young. Financial advisors can offer a sound financial planning process that takes into account your current income and savings, your debt, your financial liabilities and responsibilities, and your financial goals for later on in life. The sooner you start planning with a professional, the sooner you can start reaping the rewards.
Make Decisions Based on Your Goals
When thinking about your finances, you should always try to make any decisions based upon goals you have set for yourself. Try to list out your goals in five year increments. Write out where you want to be financially and what you want out of life over the next 5, 10, 15, 20 years, and so on. Then you can see what position you need to be in financially to meet those goals. For instance, if one of your goals is to own a home you should do research on how you can properly prepare your finances to achieve this. Knowing essential requirements such as the minimum credit score to buy a house and steps to qualify for a mortgage can help you make more strategic decisions aligned with your goals. From there you can work to make your dreams your new reality.
Save as Much as Possible
While in your twenties, you’re probably sick and tired of hearing people tell you to stop spending or going out and to save your money. The truth is, they wouldn’t be telling you that if it wasn’t important. It’s also true, however, that you can save your money and still enjoy yourself. If you don’t already know or practice it, learn some basic strategies for budgeting and saving. Setting up financial structure will help you to stay on track when it comes to making those monetary decisions that will affect your future and goals. While you might need to cut back here and there on extravagant nights out or shopping sprees, your future self will thank you for the discipline you’re learning.
Start a Retirement Fund
As a twenty-something, you likely haven’t thought about retirement even a little bit. However, it’s important to change that as soon as possible. If you’re unsure when you should start saving for retirement, the earlier the better. Even delaying five years can mean you miss out on thousands of dollars when it’s time for you to retire. If your employer has a plan, enroll in it immediately. It’s even better if they match a portion of your contributions since you’ll see more return later on and can better ensure retirement success.
There’s so much to consider when thinking about your finances. Being in your twenties is hard enough with all of the personal exploration that’s happening. However, it’s crucial for you to take a step back and get your finances in order. By doing so, you’ll be able to make even better decisions as you continue to age and advance in life.