Every teenager dreams of being an adult, living life by their own rules. The notion that the 1920s would be a decade of fun, exploration, and experimentation is very common. However, if this time period is used wisely, it can become a launchpad towards your financial growth and independence.
We know we sound like one of those financial geeks, but building money in today’s generation is such a blessing. We have already seen tons of news on how Genz’s better at saving than millenials. With the same intention, you can plan to achieve early retirement while building wealth that serves your needs.
If you use your money wisely, then you won’t be bound by it; instead, you can be its master. However, let us tell you, the way to build financial freedom in your 20s is not through luck and manifestation only. You also need to take practical steps that make you own it. Here is how you can do it like a pro.
6 Ways To Change Paychecks Into Power Moves
- Enter Your Responsible Era With Good Spending Habits
Anyone who has good spending habits in their 20s is bound to be more secure financially in their 30s. So, get your act together to thrive financially later. We know this is the hardest age to be financially responsible because, during this time, teens are transitioning into adulthood and entering the workforce.
Most people in this age will be at a crossroads on whether they should lock in and level up or they should go YOLO. Although there will be a time period when you will not be cautious about your finances, develop the mindset of securing the bag and build financial boundaries.
Start being the main character with your savings account so that you can reap its benefits in your 30s and again in your 40s. So, how do you prioritize good spending habits?
To do this, we suggest that you activate grown-up mode, which includes a weekly and monthly budget that lists all the activities that you need to complete. Probably, there will be ‘oops months ‘ where you will be totally off guard; however, get back on track for the coming months, and you will see progress within half a year.
- Protect Your Assets Like It Is Under NDA
One thing we have learned over time is that owning assets is not crucial if you do not know how to protect them. For example, suppose your doctor’s appointment costs $100. However, if you have an insurance plan, then it might cost $50 or even less. That is the benefit of having insurance plans.
Now, insurance may sound intimidating to those who already make some kind of investments. However, your investments will make you rich later, whereas insurance plans will cut your costs in your day-to-day life. This goes for your health insurance, landlord insurance, car insurance, and so many other things.
If you are not protecting your assets, then you will be the victim of inflation while paying for it. All this knowledge is very important, which is why you should either consult a trusted family member or a reliable insurance agent. Either way, stay in the loop about your insurance plans to make plans accordingly.
- Smart Investment Is The Key
Investing sounds like one of the most secure ways to multiply your money right now. At least, that’s what everyone has heard from all the financial gurus online. As per financial gurus online, 20s it is the best time to start investing, as compounding money ages like fine wine.
However, let us break down the notion by saying ‘investing is not the means to grow rich overnight’, in any case. Hence, start with realistic expectations and do not rage quit halfway through.
Start by testing the waters first. Invest low and slow because you cannot afford to lose much. Wise men say investing is two sides of the same coin; it can double your money. However, one wrong step can also wipe it all away.
Our biggest tip? Set realistic investment goals with timelines. Apart from this, try to diversify your investments by getting gold or doing SIPs. Once again, before picking any form of investment, always make sure that you consult a knowledgeable person for this. Going in with any of the methods with half-knowledge is not a flex at all!
- Be The CEO Of Your Finances With a Good Credit Score
There is a lot of taboo around the word ‘credit,’ but people who use it wisely can build financial freedom like a breeze. If you are new to this term, then you might wonder what the benefit of it is. Let me tell you, it’s limitless.
People who have high credit scores are able to get big loans at low interest rates. Not to say that if you apply for bigger loans, they get approved quickly. Hence, those who say time is money are correct. With a good credit score, you can make money even quicker. Another major advantage is that you also get high borrowing rates. Now, these perks go crazy, but at the end of the day, a good credit score gives you a sense of credibility.
It makes you feel like a responsible person who pays their dues on time and adds a feather to your cap. This feather in your cap allows you to build a good credit score and level up the financial status of your loved ones, too. Yes, try to pass on your knowledge to as many people as possible.
If you’re just starting out, then get help from a legal professional in this matter. This will ensure you do not suffer like others who are scared of the word ‘credit’ and think of it as a financial horror story.
- Have ‘Just In Case’ Emergency Savings
Emergency savings are my stress breaker and happiness booster. Anyone in their 20s who has a stable job should prioritize building emergency savings. You can either save a bit of money from your monthly income ,or you can invest that portion elsewhere. Anyways, the goal is to have an emergency fund that can help you during unpredictable situations.
A genius idea for building up emergency savings is to save your tax refunds. Most people do not calculate their tax refunds, which can be an unexpected addition to their savings. Being a human, your first impulse might be to spend it. However, now you should try to wrap your tax returns in bubble wrap to armor your assets, well, figuratively.
Since most people in their 20’s are freshers, it can be difficult to maintain emergency savings with all the insurance and investment plans. However, be rigid about this. Sit down and calculate your essential costs, and cut down on having entertainment and splurging wherever you can.
- Be Bank Smart
Finally, the last tip is to be bank-smart. A lot of us just focus on our bank account to check the amount of money credited and order takeout from it. But that is not how it should be. There is so much more to know that can help you save your bucks and make ‘passive money’ by just letting it sit.
For example, did you know that if you do not have a sufficient balance in your savings account, then there can be deductions for it? Next, did you know that you can earn a little bit of interest on your savings account for practically doing nothing? Although the money might not be much, you get a small interest if your savings account has a large chunk. This is why you should transfer your money from your checking account to a savings account so that it can sit, marinate, and blossom into a money tree eventually.
Conclusion
To be honest, this is one of the hardest ages to be financially smart, but if you are young, your future will thank you big time. Definitely, there will be times when peer pressure makes you think twice, but consider the bigger picture.
Even if you are on a spending spree for a month, budget like a boss in the next one. Think about the longer game and bounce back for the future you. Adulting and financing can be stressful right now, but imagine yourself in the future drinking iced coffee by the beaches of Bali or the streets of Paris. Sounds fancy, right? If so, then be smart with your money and make big money moves for your future.
