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When you first become an adult, it’s like everyone expects you to know everything and be able to do adult things. But for many young people, money is a topic that they don’t really know anything about. If your school or parent’s never taught you about money, here are some smart money moves to make in your 20s.
Create A Budget
A budget is helpful to have so you know what you’re bringing in and what’s going out. Don’t look at your bank account wondering where all your money went. Give your money a place to go and be intentional about it.
To create a budget, you don’t even have to be super detailed with it. Write down all of your non-negotiable expenses (such as rent, your phone bill, etc). Write down expenses that may fluctuate (like your groceries). Then, add in your income. If your income doesn’t cover your expenses, it’s time to cut back. If it does, make a plan on what you will do when you have extra money.
A simple budget can look like this:
- 50% of your income to needs, including fluctuating expenses.
- 30% of your income to wants, like clothes, traveling, etc.
- 20% of your income to paying off debt, savings, or investing.
Not really into the whole budgeting thing? I can teach you how to create a SUPER simple budget even if you hate budgeting.
Save For A Rainy Day
Bad and crazy things can happen to anyone. To spare yourself the pain of coughing over hundreds or thousands of dollars at one time, or worse, getting into debt to pay for an emergency, put some money aside for a rainy day.
You don’t have to save hundreds of dollars a month. In fact, you can save just a few dollars each paycheck if that’s all you can afford right now. The key is to get in the habit of saving for when things will inevitably go wrong. That way, you’re not dipping into your monthly income or getting into debt to cover them.
Invest Starting Now
If you want to be able to retire, start investing in your future life now. Just like with savings, it doesn’t have to be much, but a few dollars every paycheck is better than nothing at all.
If your employer offers a 401(k), start with that. If not, you can always start a Roth IRA if you’re eligible. Other options are investing with robo-advisers like Acorns or Betterment, or investing in other options like real estate (get a duplex and live in one side while renting the other) or learning the stock market.
I know, insurance can suck, especially when you’re young. Car insurance is expensive, health insurance is a joke, and let’s not even talk about certain life insurance options. But, the fact is that insurance is important. It’s there for a reason.
In may seem stupid to pay so much every month for something you may never use, but what happens if you need it? Don’t put your health, life, or car in jeopardy because you didn’t want to invest in the insurances to cover them. You and your property are too important to lose.
Make Smart Career Moves
Don’t be afraid to ask for a raise. Get a new job if you want. Or, go back to school and learn a new trade or skill. Invest in starting a business. Whatever you want to do to further your career, go for it. Now is the best time.
Smart money moves don’t have to happen when you’re in your 30s and 40s. You can start building a foundation right now in your 20s.
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