Only few people get to attain financial success in their 20s. This is mainly because most of us make financial mistakes early in our working life and correcting such mistakes often costs us money and time. Therefore, if you step out with the right financial information and make good financial decisions in the onset, you greatly increase your chances of becoming financial successful and you gain a significant head start over the majority who start out with mistakes. The following money tips are a healthy guide towards your goal of being financially successful in your 20s.
Avoid credit cards – The lure of spending through credit cards can easily get you spending beyond your means. This will get you in a credit card cycle that will limit your savings and investments.
Pay student loan debt slowly – Student loan interest is low and paying it over a longer period of time is financially wiser. To pay for a longer period, you can request for a lower repayment rate, ask for deferment or forbearance. This will not affect your credit score. However, late payment of your student loan will affect your credit score and therefore, you should ensure that you pay the agreed amount on time.
Open an online savings account – Online savings accounts pay better interest rates and they also ensure that your funds are not easily accessible through ATMs. This helps in the saving discipline. You can start out low with savings of between $ 10 to $ 25 and work it upwards over time. The compounded effects of these low amounts over time can be quite significant.
Live within your means – When you are in your 20s, it is quite tempting to purchase a flashy sports car on loan or expensive electronics. However, the debt levels can easily get you into a financial problem. It is wise to defer such heavy expenditure until you have saved enough and are financially successful.
Utilize your local library for entertainment – You can save a lot on your cable utility costs and your DVD delivery costs by simply borrowing books, movies and CDs from your local library whenever you need to.
Get a roommate – sharing costs by having a roommate can save you a lot of money that you can use for other purposes. Besides rent, you can save on many other shared house costs.
Sell your old stuff – As opposed to always donating your old stuff, you should consider selling such stuff, for example on Ebay, to build up on your cash.
Start your 401k immediately – Starting on your 401k retirement savings plan early will ensure that you accumulate enough funds for your retirement. You also get used to paying early and do not get an opportunity of spending such cash.
Open a Roth IRA – Once again, starting on your retirement plan early will give you peace of mind over your working years and you will have accumulated more funds as opposed to starting late.
Get a change bucket – You can have a change bucket where you empty the loose change from your pockets every day or over weekends. You can then retrieve such funds yearly or semiannually and add up the funds to your savings. This is wiser than using a savings machine since the machine pays back 0.92 dollars for every dollar stored.
Get a second job – Though not a favorite, getting a second job is one of the effective ways of adding onto your earnings and it subsequently works towards your financial success.