10 Money Management Insights For Young Adults In Their 20s
When we are young, we are often prone to making mistakes. One of the main aspects we struggle with especially during our 20s is handling our finances and credit. As we grow older and become more mature, we will realize that we could actually benefit from better money management practices early on in our lives. The following lessons are applicable to any age group— because it’s never too late to improve your financial habits!
Do What Works For You
As young people, we often follow in the footsteps of people before us— be it our parents, guardians, or certain persons we look up to. However, always put in mind that what works for others may not always work for you. For example, credit cards are popular for young adults. But if you think you are not yet financially able to cope with paying your monthly debts, then don’t try it just yet.
Start Saving Now
People in their 20s often think of retirement plans and insurance as a task only for older and richer people. However, it should be carefully planned and thought over as early as now. Automatic bank transfers to your savings account might actually be helpful since you will be less likely to spend your newly-earned paycheck.
Quality Over Quantity
When you’re young, you are more inclined to spend your cash and shop ‘til you drop. However, it is important to make sure that the wants we spend on are of durable and lasting quality, especially for huge purchases. When you commit to choosing better products, you are making an investment which will result in fewer expenses in the long run!
Make Debt Really Count
We often get tempted by the appeal of spending more through credit cards. Nevertheless, we should learn early on that credit should be considered and used carefully. When you max out a credit card over things that exceed your normal paying capacity, you are actually losing more in the long run due to interest. So make sure that when you incur debt, it shall be beneficial to you for personal investment, such as home loans, business loans, or student loans.
You Can’t Escape Debt And Its Consequences
Again, only dive into the world of credit if you are financially stable and ready to take responsibility for paying. If you don’t take care of your debts, it could actually make things worse for you instead of better. Some examples of this include a lower credit score or even bankruptcy.
Set Clear Financial Goals
Now that you are financially able, know your priorities. It is not enough that you have learned how to categorize your savings and expenses, but you must also have clear goals so that you know where all your hard work is directed. Do you want to pay off the mortgage? Or perhaps personal loans? Save up for your future children’s college tuition so you don’t have to face student loans?
It varies from one person to another, so make sure you know what you want!
Be Realistic About Your Budget
Budgeting is more than just dividing your fixed expenses and savings into categories. You should also know how to control your impulses for spending and cut down unnecessary expenses as needed. This way, you are creating improved money habits for your future.
Volunteerism Adds Up
Some people hesitate to volunteer because their time is not being paid. But when you serve your community, it improves your professional life through acquiring new skills and experiences that could be beneficial for your employment or promotion.
Health Insurance Is A Must
Although you are healthy now, who knows when emergencies might happen? When you are secured through health insurance, you’ll worry less about hospital bills and medicinal costs. Get yourself covered as early as now so that you can save more money for the future.
Understand Your Emotional Connection To Money
It becomes easier to control your urges in spending when you understand what motivates you, your habits, and your attitude. When we identify our patterns, we can quickly address the problem and think up better, healthier approaches to life as opposed to spending money and retail therapy.
Based on materials from moneycrashers.com