Your 20s are the experimental decade of adulthood. You’re learning so much about yourself during this time. If you’d like to know about what I learned in my 20s about money, take a look at these 20 principles.
1. Food is your largest expense
Food is your largest expense if you allow it to be. If you’re constantly dining out, you’re going to waste a fortune on food. Learn how to prepare your favorite meals at home. You’ll save so much money
2. Use a credit card responsibly
A credit card is important because you’ll want to purchase a home one day. Use it as a tool to help you build credit by paying it off on time. Try not to use more than 1/3 of your available credit.
3. Ask for raises
Talk to your boss when you know you’re doing an excellent job at work. Provide great work. Then, you can ask for a raise. Don’t be shy about it either.
Invest in your 401K plan at work. Invest in the stock market. Invest in real estate. You’re not too young. The earlier you start, the more compound interest will be on your side.
5. Maintain a side hustle
While you have the youth and the energy, work really hard. Get a second job that allows you to make a few hundred or thousands each month. Stack that money.
6. Develop passive income streams
If you have expertise in a specific area, write a book and sell it many times over. If you’re great with YouTube, create a channel with consistent videos. As people watch, you’ll earn commissions through ads. Get creative with your passive income strategies. Learn more about such strategies more easily via the internet.
7. Work toward ownership
Home ownership allows you to build equity in something you can pass down to your future children. It’s a great wealth-building tool. Create a savings account to use specifically for your future down payment.
8. Pay off your debt
When you have debt hanging over your head, it can be a debilitating feeling as soon as you possibly can, create a plan to get out of debt. Then, get out as quickly as you can. Consider the popular debt snowball plan.
9. Do not co-sign for anyone
When you co-sign on loan for someone else, chances are you’ll end up paying for the loan yourself. If you can avoid it, don’t take on more debt that belongs to someone else.
10. Find a financial mentor
When you’re able to sit down and talk to someone who knows more than you, your life will become better as a result of the knowledge you apply. Get around someone who is financially astute in order to increase your financial portfolio.
11. Pay yourself first
Develop your own savings account that’s specifically for the things you want to do. Whether you want to get a new car, go on a vacation, or enjoy a massage, put yourself first by saving.
12. Maintain an emergency fund
An emergency fund is such an important asset because you don’t have to wonder about where the money is coming from should you encounter a financial crisis. If you don’t have the money when an unexpected emergency hits, you can apply for an installment loan online. However, be very intentional about paying it off and saving for emergencies in the future.
13. Discipline will pay off
Discipline doesn’t feel good when you’re in the moment. It’s a lot easier to visit the local fast food restaurant instead of going home to prepare a meal that’ll save you money. However, your habits will either benefit your life or derail your success because of your discipline. Learn to practice it now.
14. Invest in yourself
When you know better, you’ll be able to do better. In order to do better, you need to invest in your own financial education. Attend seminars. Purchase online courses from reputable sources. Purchase apps that teach you how to invest. The more you know, the more you can grow.
15. Read finance books
If you’re not an avid reader, it’s wise to become one. Even if you have to start with audiobooks, make sure you’re consuming information about personal finances. Consider reading Think and Grow Rich by Napoleon Hill and Secrets of the Millionaire Mind by T. Harv Eker. Those are great options to start with.
16. Keep the right company around you
Your friends have a major impact on the person you become. It’s often stated that “if you show me your friends, I’ll show you your future.” This doesn’t mean that you need to throw away your broke friends. However, spend less time with them. Financial insecurity stems from a mindset. If they’re not willing to improve as well, they’ll subconsciously do things to hold you back.
17. Automate your finances
Create a bank account for all of your bills. Then, automate the entire process. When the money goes into that account at a certain time of the month, you know it’s there. Therefore, you can schedule and automate payments for bills like credit cards, utilities, and savings.
18. Set inconvenient access to your savings account
When it’s easy to access your savings account, it can be a lot easier to dip into irresponsibly. Create separate savings account with a different bank. When you automate the money to go into that savings account, make sure that it’s hard to access. You should never have a debit card to access those funds.
19. Stick to a budget
A budget will keep you in line. Whether it’s a $5 bill you get from your grandmother or the couple hundred you receive in your weekly paycheck, make sure you give every single penny an assignment. When you know where your money is going, it’s easier to build wealth and eliminate financial woes.
20. Don’t try to keep up with the Joneses’ (or the Kardashians)
So many people jump through hoops to impress people they don’t like with things they don’t even need. Don’t do this to yourself. Live within your means. Be grateful for what you have and keep your eyes on your own paper. The grass looks greener on the other side. However, that doesn’t mean it is.
If you’re already in your 30s, 40s, or 50s, your list might look a bit different. However, the key is to get started today. When you change your mindset towards your finances, you can completely change your life.