Money can be a daunting aspect in the life of a 20-something, especially now, when you need to get serious about it. Taxes and investments become common buzzwords, and the concept of ‘savings’ on a paycheque-to-paycheque lifestyle can send shivers down your spine. But not to worry! We give you a comprehensive list of tips to keep in mind to make wise financial decisions in your 20s, for a secure and stress-free life by the time you’re in your 30s.
1. Say yes to budgets!
Yes, it needs to be done. You need to make the ultimate choice between ‘need’ and ‘want’ every month that you receive your salary, and breakdown your expenses based on a decided priority list. Needless to say, rent, groceries, bills, and loans should be first on your monthly list.
2. Create an emergency fund
As cliched as this sounds, life is unpredictable. You can never tell when you’re going to be needing a lump sum of money, and it’s only wise to set up a fund to cater to the need if it should ever arise. It could be anything from a medical emergency to an academic degree. Better safe than sorry!
3. Slowly step away from the ‘Mom and Dad Fund’
It’s a wonderful thing to have parents to support you whenever you need them. However, you have to learn to slowly snip yourself from the comfortable bubble they’ve provided you your entire life and start taking charge. You can always rely on them in the case of a dire situation where they will come to your aid, but depending on them for all your needs and wants, needs to stop.
4. Intelligent investments
It can get very scary when TV commercials have warnings for mutual funds ‘being subjected to market risks’. But they are definitely a lot less overwhelming when you have your goals in place. Invest in a SIP (Systematic Investment Plan) which is a mixed bag of mutual funds, and is very easy to understand. Make Google your best friend!
5. Pay off your student loans
This is for you if you’ve taken an education loan for your master’s degree that you need to take care of, before the debt spills into your 30s. Student loans can be a messy affair, but if taken care of with proper planning and fixed payments, it can be dealt with before other important financial decisions come into play. Get rid of them debts!
6. Take care of extra income immediately
You have already figured out how to live on your current salary, so make the smart decision and transfer any extra income you receive (bonuses and appraisals) directly into your savings, than splurge on something you know can wait, in the future.
7. Get insured
This doesn’t get emphasized enough, when we are taught the idea of saving and investing. Getting yourself insured is the smartest way to save a lot of money, especially medical insurance, benefits of which, can save you a ton of money given how expensive treatments are getting by the day.
8. Begin planning for your goals
It can be a brand new car, your very own apartment, a graduate degree, your wedding, or even a luxury holiday destination – it’s important to sit down and start chalking down a detailed sheet of funds you will need to accomplish those goals. Based on your requirements, you may need to start multiple saving accounts, invest in bonds, or seek advice from experts to fulfill your dreams.
9. Get ALL your documents in order
The best way to get started on being financially sound is to gather data of all your transactions and purchases in one place, ready to be viewed at moment’s notice for all future investments. Your bank statements, salary slips, and any other financial contracts and agreements you have entered with all parties must be available for your perusal. Less clutter, more profit!
10. Avoid huge credit card debts
It seems enticing at first to give into the tempting offers that banks provide on their credit cards, and we are a little too familiar with calls that we receive from various companies, telling us how it’s so “easy” to sign up for one. Even if you do hold a credit card, make sure that you pay off your debts to avoid drowning in additional interest rates, in the future.
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