Your 20’s is the best time to capitalize on your financial independence. Managing your money smartly when you start earning will ensure a wealthy future. Here are some tips on how to be more conscious about it.
Financial freedom comes with behaving responsibly with money. When you are in your 20’s, and working at your first job, the thrill of wanting to spend what you earn is quite natural. But, this also the right age to start managing your money smartly. Prepare for a secure future by starting to save and invest carefully.
Here are some smart habits to develop to carve a path towards building your wealth.
1. Avoid the temptation to borrow money:
· Borrowing is a habit that can grow into an addiction if it is not kept in check. When you’re in your twenties, you need to stop using your family and friends as a fall-back for monetary needs.
· Say no to casual borrowing, which due to its lack of interest and late fee penalty, makes it harder for you to gain financial independence.
· True financial independence is only achieved when you stop borrowing and learn to manage your expenses based on the paycheck that you receive.
2. Use an app to track your expenses:
· Technology has made it fairly easy for you to keep a tab on finances. You can use a app like Walnut or mTrackr to draw up a monthly budget. This will help you get an overall view of your income and you can adjust your expenses depending on the figures.
· Track your spending behaviour to cut down on unnecessary expenses. Effective money management via an app will also ensure that you don’t overextend your finances.
· Having an auto payment system set for your house bills like rent and electricity is a good way to keep yourself from forgetting to make important payments. The auto-reminder option on the app will also help you save before you spend.
3. Don’t spend all the money you earn:
· The best way to ensure you are not spending everything you earn is to invest. You can choose fixed deposits or SIPs to invest slowly yet steadily and gain returns.
· Coming up with plans for your future, like buying a house in your thirties or purchasing a vehicle for yourself in 5 years is a good way to ensure that your savings become more focused.
4. Be accountable for the money you lend:
· Lending money to someone in need is an act of kindness, but valuing your hard-earned money is equally important. So be conscious of the money you are lending to friends.
· Don’t feel embarrassed to ask the borrower tell you his or her payback plan, and ensure that you can afford to lend the amount the borrower is asking for.
5. Don’t let peer pressure make you spend unnecessarily:
· In your mid twenties, you are likely to be staying away from your family. So, you are fully responsible for your money and your own life.
· While you have the right to spend your money the way you want it, avoid succumbing to peer pressure. When you are hanging out with friends, it is sometimes hard to control what you are spending. The best way to tackle this is by setting a budget for your social outings. Learn to say no to things that don’t align with your financial goals.
6. Have financial goals and put plans into place to meet them:
· Having goals help you stay on track with your finances. Have quarterly, bi-annual and yearly goals for best results.
· You can break up your goals into small and big ones. Buying your loved one’s a gift can be a small financial goal while buying yourself a car can be one of the bigger goals. These will keep you in check financially, and achieving them will also give you sense of confidence!
These 5 habits will go a long way to ensure that you are not only financially self-sufficient in your 20’s, but also at the top of the ladder throughout your life.