Doesn’t the thought of becoming dirt poor while you’re on retirement strike fear at your very core? Sure, you may be in your 20s right now, but you can’t help but worry about how things can easily snowball for the worse if you aren’t prepared financially.
I find the scenario cringe-worthy, really. I can’t imagine having to rely on my kids for money, or worse, beg for it.
I’d bet that you feel the same way too, don’t you? I’d bet that just like everyone else in the world, you want a fair shake at becoming financially stable.
Well, if you’ve been nodding your head all along saying, “I agree 101% at what this guys is saying,” then you’re in the right place.
I’m going to share with you five wise financial decisions that you can make while you’re still in your 20s, that will help you achieve financial stability.
1. Make smart purchases.
I know it sounds counter-intuitive. You would think that your primary goal when you’re in your 20s is to focus on savings and to get out of debt. However, you need to realize that making smart purchases can help you achieve your goals a lot sooner — and so much more.
These are some of the smart purchases that you can make:
- Financial literacy training
- Investments
- Insurance
You will realize that the sooner you spend for these quality investments, the sooner you’ll attain financial stability and abundance.
2. Take advantage of your company’s 401(k) plan.
If you aren’t quite familiar with the concept, here’s how The Wall Street Journal describes it, “A 401(k) is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.”
While opening an account for your personal savings certainly has its merits, you need to take advantage of your company’s 401(k). Not only does it help safe keep your money, but it also allows your money to grow.
Depending on how much you put into your 401(k), you can retire with millions of dollars in your bank account.
3. Have a get-out-of-debt plan.
Most people in their 20s usually have boatloads of debt that they need to pay off. If you are to get rid of all your debts, you need to make a conscious decision that you need to stop borrowing money and to try to live within your means.
While there are a plethora of ways that you can set your plans to get out of debt, allow me to share with you five very simple steps to do it.
Step 1: Decide never to borrow money.
Step 2: Create an emergency fund.
Step 3: Establish a budget and stick to it.
Step 4: Manage your debt.
Step 5: Set as much money as you can to pay-off your debt.
While I am just scratching the surface with the 5-step game plan that I shared, I promise you that if you’ll follow it, you’ll be in way better financial condition than you will be if you won’t.
4. Automate your savings.
Relying on willpower alone so you can save money is a terrible idea, mainly because it’s an exhaustible resource.
If you are like most people in their 20s, you probably wanted to save, but you just couldn’t resist the new smartphone released by Apple Inc., or the new Jordan shoes from Nike (among other things).
Instead of relying on willpower alone, you can automate your savings instead. Banks have an automatic transfer option that you can use to transfer a portion of your money from one account to another.
That being said, you can set an automatic transfer to be scheduled from the account where you receive your paycheck, to your savings account.
5. Track and manage your money.
There’s a reason why the adage, “Don’t ask where your money went. Tell it where to go.” is so popular — it flat out works!
Tracking your money gives you insight on which areas in your financial management you are weakest. For example, you would know if you’ve been spending excessively on eating out if you’ve been tracking your expenses. At that point, you’d be able to make corrective actions by setting the proper budget.
What’s next?
What are some of the best financial decisions that you think a person at their 20s should make? Please share your ideas in the comments section below. Cheers!
See Also: 10 Worst Money Mistakes to Make in Your 20s