The 20’s are an incredibly important decade for a life of financial wellbeing. In all likelihood, it’s the first time you’ve been financially independent. The Bank of Mum and Dad has finally dried up, and it’s important you make the right financial decisions to avoid messy situations further down the line.
Forget swimming with dolphins or seeing the pyramids. These are your new targets before you hit 30:
1) Have Financial Goals
Which doesn’t just mean “Get A Job & Get Paid”. I’m talking realistic financial goals. If you’re in debt, it could be; slay the debt monster! If you’ve already achieved a balanced budget, then you might want to work on building your networth. This is a great first step to reaching financial independence.
My tip: Set some short and long term goals, and be sure to track your progress towards meeting them. Use the money toolkit (click here to download) that I’ve developed to help you set and track your goals.
2) Get Insured
I know it hurts to admit, but our college days are behind us. No longer are we riding the carefree wave of invincibility, and it’s important to be prepared for the worst. Protect your belongings, health and income, and then give yourself a pat on the back.
3) Establish an emergency fund
Too many people live paycheque to paycheque. When you hit a financial bump in the road (and believe me, you will), you’ll thank yourself for starting an emergency fund. Whether you’ve lost your job or blown a transmission, you’ll be able to handle it. The ultimate goal is to accumulate six months of living expenses, but even a few thousand dollars is helpful.
My tip: A simple savings account is a good way to get started. Set aside a little from each paycheque (it can be as little as $1 a day. The issue is not in the amount but rather in the consistency. You’ll want to take advantage of the power of compounding which I’ll talk more about in my articles later; so stay tuned), and you’ll soon have a nice little nest egg. Now your only challenge is resisting the temptation to spend it on booze and artisan bread.
4) Create a second stream of income
I had two sources of income when I was at university to cover my accommodation and living expenses. I suggest that you find a second source of income that provides at least $500 a month. It’s a great way to accommodate for unplanned expenses, like your partner’s birthday that you just remembered is next week. Plus, you can always add some to your emergency fund.
5) Free yourself of debt
Have you got a student loan? Perhaps you’ve pushed your credit card a bit too far? Make it your aim to have them paid off by the time you’re 30. Download my money toolkit (click here to download) to help you plan for debt repayment.
My tip: Try to avoid creating unnecessary debt, it’s like running into a wind that won’t stop blowing.
Planning and self-restraint might be alien concepts when you’re in your 20’s, but implementing them now can have huge ramifications for your financial well-being later in life. Try your best to tick off as many of these goals before your 30th as possible, and if you’re feeling particularly bold, try creating your own goals too. Then you can turn your attention back to the dolphins and the pyramids without worrying about how you’ll afford to pay for them.
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