Many 20-somethings make some common financial mistakes that are easily avoidable. Here are 5 financial tips that will help you to plan for the future, while still living a great life today.
1. Forget “following your passion” to a career.
Most people in their 20’s don’t know exactly what they want, and that’s okay. What you’ll probably find is that opportunities will present themselves if you start taking action. You may eventually find out you’re passionate about something that you aren’t even aware of now. Chances are if you become good at something, you’ll become passionate about it down the road. In today’s world, there is the freedom to design and create your own career. Try seeking out people who have found success who can be your mentor. Read books and blogs by creative people that you admire.
2. Don’t go further into debt.
Is student loan debt hanging over your head? Don’t make things worse by adding a big car payment or high-interest credit card debt. The sooner you can payoff your debt, the better. Allocate a portion of your income above the minimum payment to attack that debt. Freedom from debt allows for financial independence sooner than you think.
3. Spend your money on experiences, not “things.”
Your 20’s are a great time to explore new experiences. Travel to new places, or explore a new part of your own city. Meet new people and join social groups. Volunteer your time to a cause that is important to you. You’ll likely find more fulfillment out of great life experiences than you will get from having the latest gadget or fashion accessory.
4. Don’t freak out if you haven’t landed your dream job.
Most people go through many, many jobs before they find the right one. So get your foot in the door in a place that has some potential upside for you, and build some relationships. You never know where it may pay off down the road. If you have a good attitude and are open to many possibilities, you might be surprised what may present itself.
5. Develop money saving habits.
The key to financial independence isn’t earning a huge wage. It is learning to live within your means, no matter what your income is. Avoid impulse buying. A little extra time spent on planning can help you conserve money and resources. Negotiate big-ticket items. The key is not giving up the things that you truly enjoy, while learning to save money by cutting out the rest. Learn to save a little each month and move it to an account where you won’t be tempted to spend it. Even better, put money into tax-advantaged retirement savings accounts and let the power of compounding returns go to work for you. Believe me, your future self will thank you!