In a perfect world, your 20s are an exceptionally fun decade. But in reality, many people swing about in their 20s, struggling to define exactly what they want, who they are, and what kind of life they truly want to live.
Too many 20-somethings thoughtlessly chase higher incomes with no clear endgame — and spend every penny along the way, entering their 30s with no financial assets to show for it.
But making smart financial choices in your 20s can help set you up for long-term success.
Here are some important financial decisions that you should consider in your twenties:
Learn to use a monthly budget: A budget will help you cut back on unnecessary purchases and avoid racking up debt. Aim for a 50/30/20 budget and allocate 50% of earnings towards necessities, 30% for wants, and 20% towards debt repayment and savings.
Start saving: Keep a specific percentage of your income aside before you use the rest of the income. Generally, putting aside 10% of your income would be appropriate initially.
Invest in yourself: At this point in your life, your ability to earn a living is probably your biggest asset. Spending some money on learning new skills will make you a more attractive employee and help boost your career potential.
Pay off student loan first: Carrying over a loan would never let you get out of the financial problems. Put at least 10 % of your income towards debt payment.
Start an emergency fund: Set aside between three and nine months of living expenses in a savings account. That money will serve as a financial cushion in case of crisis.
Lower the credit card limit: For setting up your own limit, you should use the lowest possible number or just spend only the amount that you have a cash reserve for.
Be reasonable when you shop: If you are a shopaholic type, then it is better to make a list of important items that you need when you go shopping. And stick to the list precisely.
Taking control of your finances at a young age — will make it easier for you to achieve your goals and lead a better life.