In your 20s, you feel invincible.
The world is at your feet, and you’ve got your whole live ahead of you to achieve your goals. That means you’re less likely to worry about things like saving for the future or planning for retirement. However, faster than most of us realise, our first decade of adulthood has passed, and we’re left with nothing in our bank to show for it.
Instead of living from salary to salary, you should be thinking about establishing the kind of financial habits that will help to guide you through the rest of your life. Remember, this is the life stage where you might build a career, find a spouse, and start saving for a family. It’s essential to have a plan. Fortunately, if you’re stumped on where to start, the following cash goals could be a great way to begin.
In an ideal world, we’d all have a limitless emergency fund that would help us whenever trouble comes knocking. In the real world, there’s a good chance that your emergency fund won’t always be able to get you out of every tight spot. You might need to consider things like personal loans and cash advances too.
The good news is that you can reduce the amount of stress and debt that you need to take on by putting a small amount of your pay away into a savings fund each month. Saving as little as 10% of your salary can ensure that you’re ready for anything when trouble comes your way. Although you might not save a lot of cash immediately, the quicker you start making a habit of saving a portion of your income, the quicker you’ll reach your goals.
Speaking of loans that you might have to take out at some point in your life, there’s one very important deposit that you should be saving towards – your home. Although you probably won’t be able to pay for your entire house outright, the quicker you’ve got a down-payment figured out, the faster you’ll be able to move into a house on your own.
While you’re in your twenties, you could be in a great position to save a lot of money towards this goal, particularly if you’re still living with your parents. If you can avoid extra costs like rent during this time, you’ll have a lot of extra money to put towards the home of your dreams.
Just remember, don’t be too eager to buy your first home as quickly as possible. If you rush in, then you could end up spending more than you want to on a house that’s not right for you. Do your research and figure out what you can reasonably afford.
When you’re still in your twenties, retirement feels like it’s a lifetime away. While it’s true that you’ve got a good few years of working ahead of you yet, the best time to start saving for the future will always be yesterday. As soon as you get your first job, find out what kind of programs your employer has in place to help you in the future.
Contribute as much as you can towards your retirement, and remember that it’s always easier to sign up for employer programs than set something up on your own. Most employer-supported retirement packages take money straight out of your wages before you get them. This means that you never see the extra money in your bank account, and you’re less tempted to use it!
While you’re making saving for your retirement automatic, consider automating other savings strategies too. For instance, you could figure out how much cash you have to put towards your personal goals each month and set up a direct deposit from your current account to your savings account.
Finally, if you want to build as much wealth as possible for your future, then you need to make sure that you’re not just putting your extra cash in a savings account, or in your retirement portfolio. While it’s important to save for the future, investing at an early age can help you to make some serious cash in the long-term.
Start by doing your research into the kind of investments that are available for someone in your position. There are a lot of options out there for people who don’t have a lot of cash to spend these days. That means that you can start small and work your way up. Remember to learn everything you can about the basics of the stock market as you go.