Money Decisions to Make in Your Twenties
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I am sure, twenties is the best time in anyone’s life. The energy, excitement, adaptability, confidence to conquer the world and the ability to work on your passion cannot be matched. Some things that have helped me to date and I want you to keep in mind during your twenties are:
Start building an emergency fund: Unexpected events like job loss, accident, losing a loved one, illness can happen to anyone at any time. Not having funds in such situations can make it even worse. So, one of the first money decisions you should make is to start an emergency fund. Save some money in a separate account (make it easier to manage) and only use it in difficult times. Don’t buy stocks with this money or make any investments that can lose money or are illiquid.
Start saving for retirement: When you have just started to work, retirement seems so distant; so many years away that saving for retirement may not be one your priority list. Don’t let that stop from saving for retirement. Make contributions to your employer sponsored retirement plans like 401K and take advantage of any matching contributions. One of the best retirement saving tools available is a Roth IRA account where you can make contributions on an after tax basis, but all qualified withdrawals are tax free. Starting early will help you take advantage of the compounding returns (which can add up quickly).
Get health insurance: The cost of medical care is too high, and while in your twenties, if you are leading a healthy life, it may seem that you don’t need health insurance, it can be a big mistake to not take one. Go for a High deductible plan and protect yourself in case of a serious illness or condition that requires medical attention
Build your skills: We live in a dynamic environment, where skills that are in demand today may not be in demand tomorrow. Always keep learning and improving your skill set. It is your responsibility to keep yourself employable and prepare yourself to take advantage of change in trends. Focus on building both soft skills and technical skills; a combination of both is required to be successful in most fields.
Make Some Extra Cash: There are some great ways to make some extra money to start saving for the future. Even things like selling some of your clutter on Ebay or Amazon allows you to make some extra cash. Another way to make money online is by making and selling your own designs on sites like Etsy.
Don’t pile on credit card debt: Is debt avoidable? Yes it is if you only buy things you can pay for in cash you will never have to deal with debt. There are some big ticket items that may warrant debt like a home purchase but for most other items buy only things you can afford (even a car).
Don’t be afraid to take some risks: Twenties is about exploring what you want to do, how you want to do. Sure, you will get chances to take some risks later in your life, but taking risks early on will give you more time to recover from any unfavorable outcomes.
Build relationships: Build meaningful relationships. Building a network of handful of people who can help you in achieve your objectives and stand by you in time of crisis. Be sure you can do the same for them. It is better than collecting thousands of business cards at networking events.
Learn from mistakes of other people: It is important to learn from your own mistakes but life is too short to just learn from your own mistakes. Learn from mistakes of other people and avoid similar mistakes in your life.
Author Bio: Rohit is the founder of TheMoneyMail.com. After working in the financial industry for five years he started The Money Mail where he write about various topics related retirement planning, earning more and managing you career.
Kim’s Comments: I wish I had been smarter in my 20’s. Hopefully all of you young pups will take Rohit’s advice, especially about avoiding credit card debt. It’s a killer.
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I wish that I had started saving for retirement earlier. We contributed to my wife’s 401k as soon as we learned, but a ROTH IRA took longer to start.
I’d also say build your pension. The sooner you do it the more money you’ll have when you retire!!