The decade of our twenties is filled with numerous life chapters, such as careers and relationships.
However, every twentysomething has to battle the torments and devils that come with financial obstacles. The struggle to create and maintain financial wealth is real for every twentysomething, unless, of course, you are born with a silver spoon in your mouth.
Whether those financial nightmares come in the form of student loans, gargantuan rent, or wages that one thought could only be found in black markets, today’s twentysomethings have no choice but to face the disheartening labour market, cope with the fallout of the Covid-19 recession, and go far and wide to look for affordable accommodations while the property market struggles to find its bearings.
Considering these financial challenges, it can be difficult to figure out the most appropriate financial strategy that could bring financial security and stability in life. The financial plan is just like your set of fingerprints; it is unique to you alone. Thus, that point adds to the difficulty of formulating a sound financial strategy.
1. Putting A Budget Together
Developing a budget is the easiest and the single best thing you can do to improve your financial circumstances in your twenties (and your whole life).
Spend some time observing your income before moving on to the expenses you have made in the past six months. Are you spending more than you are earning? If so, you are your way to accumulating debts that will hug you for months, possibly years.
When you are going through your list of expenses, focus on those that were unnecessary purchases and come up with a plan to reduce or remove them in the coming months.
Adhere strictly to the budget you have created. Do not fall to the temptation of splurging irresponsibly. When you are contemplating a purchase decision, make sure you thought it through. At times, waiting for a day or two can help you reconsider whether the item you want to purchase is an essential or a necessity.
2. Work On Your Credit Immediately
Creating a solid credit reputation is important to a stable financial future, and it is vital to get on it as quickly as possible. Your credit score will be holding on to you throughout the rest of your life. Hence, the importance of choosing wise financial decisions now and keeping up with a consistent payment schedule cannot be stressed enough.
Opt for a credit that comes with a low interest rate. When a telemarketer contacts you to market a credit card that promises great rewards and redeemable points, try your best not to succumb to the marketing scheme. While a credit card of this kind can benefit an individual with a much higher credit score, it often comes with expensive annual fees. In addition, the temptation of earning more points or cashback can serve as an unhealthy incentive to spend unnecessarily. The reward for splurging is totally not worth it.
3. Be Wise When Settling Your Debts
Most twentysomethings graduate with hefty student loan debts, and it is essential to have a strategy to settle these debts as soon as possible without leaving the savings accounts dry.
Channel a fixed percentage of your monthly salary into your bank accounts to steer yourself clear from paying high penalty fees and interest rates. First, however, ensure that you have an emergency fund. Once you have one, put some money into it on a regular basis.
If you receive a bonus from your employer, put that money to good use by clearing all your debts first before planning your next holiday trip.
4. Do Not Do Your Own Taxes
We have spent countless hours in high school, college and grad school, learning various subjects such as algebra, geography, creative design and engineering. However, we hardly spent the same amount of time understanding how the tax systems work and how to make sound financial choices.
As a consequence, a lot of twentysomethings are left in a perilous position when tax season comes. So if you have no experience filing your taxes, first and foremost, do not attempt it all by yourself.
If you have no prior knowledge about filing your taxes, you are prone to making errors that have long-term consequences. Consult a tax consultant or at least a friend who is familiar with the process of filing taxes. The peace of mind will be more than worth the effort you give, and you will be establishing a solid basis for tax preparation for the rest of your life.
As twentysomethings, we have the advantage of time on our side. Therefore, if you aim to establish a worry-free financial future, it is probably best to apply these tips starting today rather than tomorrow. These tips have helped me tremendously, and I believe they can help you, too.