From a millennial to a millennial, here are 10 things you should do with your finances in your 20s!
1. Obtain A Frugal Mindset
Do you ever find it fascinating that famous people making millions a year end up going bankrupt? Sure, they make a lot! But they also spend a WHOLE LOT! Learning to live within your means, only buying things you can afford, analyzing what’s a want and what’s a need, and shopping around for deals is fundamental for your financial well-being now and the rest of your life.
Check out my post on Wants v. Needs here.
2. Get On A Written Budget
Start a written budget for yourself right now! Even if you are still in college, it’s extremely beneficial to tell your money where to go rather than wonder where it went. Give each dollar a name: make your expenses equal your income. I also suggest doing this in excel. It will be neat to look back on in the future and see how far you’ve come!
For more information, check out my post on Creating a Budget.
3. Fund An Emergency Savings Account
Life happens. And when life happens, it requires money. Whether you have an unforeseen medical expense, lose a job, or crash a car, it’s important that you have the money in the bank. An emergency savings account allows you ease of mind. If something were to happen, you don’t have to worry about the money.
Check out my post on The Emergency Fund here!
4. Pay Off Debts
You may be on a 15 year repayment plan for those student loans, but make it a goal to get it done before your 30s! Debt takes money out of your budget every month, and imagine all the awesome things you could do without it. Pay off those credit cards, car loans and student loans in your 20s and you’ll be extra thankful in your 30s!
Check out my post on How to Become Debt Free Quickly here!
5. Start Investing Today
If you’re in your 20s reading this, then you are in luck. This is the best time for you to start investing for retirement. You have time and compounding interest on your side to help generate greater wealth for you in your retirement years. Be sure to take full advantage of at least an employer 401k match program (yes, I suggest doing at least the match even when paying off debt). Start off contributing at least something and work up to 10-15% of your income to retirement. This will seriously be HUGE for you. Your future self will thank you when you retire early and are living your dream. 😊
Want to know more about investing? Check out Retirement: It’s Closer Than You Think.
6. Pack A Lunch
One thing that millennials love to do is eat out. Going to restaurants is our form of entertainment, but with that, we have also forgot how to cook! If you go out to lunch every work day and spend $8 on a lunch, that equates to $2,080 a year! A turkey and cheese sandwich will cost a whole lot less!
7. Set Goals
When you’re in your 20s, you are just getting your life started! I encourage you to dream about your future. Where do you want to be in your career? What do you want to do in your free time? Do you want to have a house? All of these things cost money. Set goals to where you want to be in 10 years, 20 years, 30 years and so on! The second part of goal setting is coming up with ways to reach your goals. Write down your goals and reflect on them over the years.
Check out Setting Financial Goals!
8. Save For Things You Want
Learning to save is fundamental in your finances. Whether it’s a new pair of shoes, an engagement ring, a car, or even a down payment on a house-you need to save money for these purchases. Create sinking funds for all of these purchases and purchase them in cash (well not a house of course)! Learning this now will transform your future as you always wait to buy something until you have the money saved up and ready to go!
Sinking funds are explained in Christmas in July?
9. Buy Life Insurance
If you’re married, have kids, or both, look into buying life insurance. If your income is necessary for others to live, you need life insurance. Only buy term life insurance-NOT whole life insurance (basically, whole life insurance is a scam and I can discuss that in a future post). Your rate will be lower the healthier you are, which is why it’s prime time to purchase in your 20s! I recommend talking with an advisor as to how large of a policy you would need to take out.
10. Be Generous
When you’re in your 20s, you usually aren’t making a whole lot of money. You’re just starting a career, paying off loans, trying to make rent, and extra cash seems hard to come by. While I understand this completely, I also want to stress the importance of giving. Tithing or giving to a great organization puts things into perspective. Giving will change your heart and you will love it! It’s so much fun to give money and see what others do with it.
Photography by Donny Zavala Photography