Your 20s are the years when you begin to get a steady paycheck. This is also the time when you get the adrenaline rush to live your life to the fullest. While some spend their money cafe-hopping, some find shopping sprees therapeutic. No matter which category you belong to, saving money in your 20s is more important than you think.
So, how do you get started managing your personal finances?
Usually, people take financial advice from peers who have “been there, done that”. But it is not always accurate, relevant, or recommended. Bearing this in mind, this article will talk about 5 pieces of financial advice you can use if you are in your 20s to help you strive towards financial stability.
1. Don’t let rainy days rain on your parade
Be it your phone acting up once more or your TV giving up the ghost, unforeseen events can drain your money in the blink of an eye. These are the moments that make you think, “If only I had set aside some money, my life would’ve been a lot easier.”
The best part is, it’s never too late to start saving your money in a rainy day fund to keep you at ease in every kind of weather. So, what should you do?
Begin by following the 50:30:20 rule.
Set aside 50% of your monthly savings for your needs, 30% for your wants, and 20% as savings. This 20% of your monthly income accumulated over years can work out to a good rainy day fund.
This was just one way to not let rainy days mess your finances, and we’ve written an entire blog on “5 ways to build a rainy day fund.” Check it out!
2. You don’t have to be rich to start investing
Most people in their 20s believe that they need a lot of money to start investing. Well, it’s a myth!
Be it stocks, mutual funds, ETFs, or even bonds for that matter, you don’t have to be rich to start investing. In fact, getting rich is a milestone that one achieves with careful financial planning and timely savings.
Start investing right from your first paycheck to take a positive step towards your financial freedom. Additionally, for newbie investors, it’s recommended that they begin with diversifying the portfolio to secure returns and minimize the risks of a single investment’s underperformance.
3. Prioritize your socialization plans to save for month-ends
We live in times when every day calls for a different activity. While Fridays are meant for clubbing, Saturdays call for movie nights. No matter what day it is, people in their 20s swear by the trend of socialization. As a result of which, most of them tend to go overboard while spending on their socialization plans.
The solution is simple: prioritize!
Learn to say ‘No!’. It’s okay to bail on plans when you are a little low on funds. Prioritize your hangouts, budget your money, and keep track of your expenses to have comfortable month-ends.
4. Make a habit to track your daily expenses
Sit back, take a moment and ask yourself, “Do I know where my money is going?”
If your answer is “No!”, then it’s high time you start keeping track of your daily expenses – be it digitally or in a notebook.
With just this small tweak, you will be able to cut down on unnecessary expenses, differentiate between your ‘needs’ and ‘wants’, and get a better budgeting plan in place. Also, while you are jotting down these daily expenses, make sure that you compile them at the end of the month and analyze the expense tracker to better manage your expenses.
5. Credit cards provide you comfort (if used wisely)
Mistaking credit cards to be your wishing well in your 20s can hurt your financial planning in the near and farther future.
Credit cards are blessings in disguise. Granted! But they can prove to be otherwise if used unwisely. It’s suggested to use the credit card only when you have the money to pay for your expenses at a later stage.
Remember that a credit card effectively loans you the money for your luxury bag. It does not pay it off for you. Eventually, you will have to repay the given amount and with interest.
But it’s not all gloomy after all. From building a good credit score to providing exciting rewards and offers, using credit cards wisely has a range of benefits in store for us.
The bottomline is: living your 20s in such a way that helps you become financially stable whilst enjoying the little things in life is an art in itself. Put these 5 financial advice to use and start building towards that financial stability and security.
The ball is now in your court!
#Adulting doesn’t have to be so hard when we have more financial advice for you. Make sure you check them out to help you achieve your financial ambitions.
This article is brought to you by Standard Chartered Bank (Singapore) Limited. All information provided is for informational purposes only.