You already know that doing the right things financially in your twenties can make a massive difference to the rest of your life.
Understanding what the right things are and translating them into actions can be hard though.
Managing your finances can be complicated. There are multiple bills to pay, different types of savings accounts available not to mention an alphabet soup of potential investments on the market!
If you’re tired of hearing about how you should be saving, investing and earning more without any guidance as to how then help is at hand.
Here’s a simple guide showing how you can earn, save and live more.
Start by investing in your most important asset – You!
1.Increase your earning potential
At this point in your life may have completed a four-year college degree, a course in a local Community College or even some specialist on the job training. There’s always the opportunity to learn and earn more.
There are tonnes of free courses online from providers such as Coursera which mean you could learn to code or speak another language in your free time.
If you choose your course carefully, making sure it aligns with your interests, you could learn for fun in your spare time and earn more during your working day with the knowledge and skills you gain.
TV time is important, but a little time spent learning could really increase your earning power. There is a huge demand for skilled workers across the world so why not take advantage.
You don’t have to put in lots of work, but a little could go a really long way. You decide how much you learn and when.
There are even a whole host of Ivy League colleges offering online distance learning courses with accreditation for a fraction of the cost of an Ivy League education. Imagine how much that could increase your earning power!
- Always pay yourself first
You probably hear every day that the reason many millennial’s don’t save is that they already have so many monthly payments to make, everything from car payments to college loans.
In most major cities across the globe rents are at record highs and transport costs show no signs of decreasing. Everything from healthcare costs to the price of a cup of coffee seems to be rising.
One more payment probably won’t make much difference so make sure you always pay yourself first!
Set up a direct debit into a savings account and make you the first person that gets paid every month. A savings account which requires as much notice as possible before you can make a withdrawal is the best option.
This may seem like a painful step but please keep reading!
Doing it this way will ensure that you will build up savings over time and not be tempted to empty it on impulse for an unexpected weekend break or new cell phone you don’t really want.
Use this tip to make it through Black Friday with your finances still on the right road.
The next point is really important!
3.Expensive debt is never going to be your friend
At some time in your life our probably going to take on some debt. It may be for a mortgage to buy your first home or it may be to invest in a new business.
Not all debt is bad, and you’ll almost certainly have some at some stage. The most important thing to know though is that all debt is not equal. Some of it is really expensive!
If you have to use short term credit or pay day loans at some stage in your life make sure you make paying it off your priority.
Sometimes the interest rate on such debt can be at least 40% and that’s not even for a year long loan! You can borrow $100 and owe $140 by the end of the MONTH with some products on the market.
That awesome new cell phone you bought may have seemed worth it at $800. Would you have parted with your hard-earned cash if you realized that the interest on the short-term loan you used to buy the phone could add another $700 or more to the cost of the phone within a few months!
Avoid expensive debt and live within your means.
But wait a second
- Do you even realize what you spend!
You must track what you spend!
It doesn’t have to be a spreadsheet with every dime listed, a notebook where you try to add up what you spend your money on weekly and you don’t need to go to an accountant for help here either.
Your online bank account may have the facility to show you how you have been spending your money by category and if not, there are a whole host of apps out there that could help you to track your spending.
Ask yourself how much you spend a month on eating out, you don’t know? You need to track your spending!
Seeing how much you spend written down in black and white can be scary.
Use that information to set money management goals and they will make you more likely to do the right thing with your money.
Get a basic grip on your finances now and cut out unnecessary spending so you have something to show for your money now and in the future.
How to grow your savings
- Make sure your money is working as hard as you
Investing is not only for the old and boring it’s for those who want to become wealthy! It may seem complicated but there are a whole host of resources available online to simplify the process for you.
There a huge range of investment options out there for you. You can invest in the stock market, property, property based investment funds and even things like gold and oil.
If your going to invest in something make sure you understand exactly what you are investing in and how it generates value. If you don’t understand or someone cannot explain it to you then its time to walk away and find something else.
Today, it’s possible to start investing with really small amounts. Saving as little as $100 a month into a savings plan linked to the stock market could leave you with thousands of dollars in just 18 months!
Investing is a long-term game, with the prospect of great returns over time.
Over time you could build up a huge pot of money which you could use to do some amazing things, travel the world or use it for the common good.
Don’t forget!
Investments can go up in value, the higher the risk the higher the return so don’t be afraid to pay for professional advice when it comes to making investment choices.
And another thing:
- Don’t ignore tax
Over the next 30 years you are going to pay a lot of tax.
Don’t pay too much though! there are a wide range of allowances and deductions you could be making to reduce your tax bill.
Do you know what they are? If you don’t take some of your savings from step 2 and go and see a specialist tax accountant.
This investment could save you thousands of dollars every year. It could be one of the best investments that you ever make!
- Make saving part of your daily life
You may have the wish to save more but its not easy.
Beware!
Every day you walk down the street some business or another is trying to get you to spend your hard earned dollars with them.
You need to embed the savings habit in your everyday life and try to cut costs in your day to day life.
Transport costs in any major city can be huge. On a daily, weekly and monthly basis you are probably spending at least $100 on transport.
There is one really simple way to cut costs here. The answer is buy a bicycle. Not only will you probably travel more quickly through heavy traffic, but you will save money in the process.
In some countries there is even the possibility to claim a tax deduction for a new bicycle. If only we all lived there!
Lifestyle changes like this can even help to make savings elsewhere. Have an expensive gym membership or regular personal trainer? If you cycle every day you give your yourself the opportunity to cut back on these expenses too.
Save money, get to your destination quicker and get fit! what more could anyone want. A simple but often overlooked solution.
There are lots of solutions like this where you can embed saving processes into your day to day life. Bring your lunch to work from home for example, of if your really creative maybe make your own clothes or maybe not.
- Get Competitive
You may do a great job one month saving or increasing your earnings but what about the next month and the month after that.
A great way to make sure that you stick to your savings plan is to turn saving into a game. Think of it like a video game with a high score. Every week, month or six months you should try to beat the amount you saved in the previous period.
If your successful then you should reward yourself, if you fail you cut your fun budget for the next month.
That’s crazy!
It may seem like a crazy idea but try it. The more competitive you are the more likely it is that this tip will work for you. You will feel great the month you beat your previous months high score.
Give it a try, play the game and grow your personal wealth.
- It may be time to cut your losses
Sometimes you do make that impulse buy, or end up starting a project or hobby and then just never going back to it.
When this happens its time to cut your losses.
There are a whole host of sites from eBay to Craigslist where you can sell your old unwanted goods and get the cash back in your wallet instead of leaving it sitting in your spare room. The important thing to do when doing this is be patient.
Don’t entertain low ball offers, remember what the item cost and make sure you try to recover all or most of the money you spent.
Don’t let a temporary mistake become a permanent loss.
Protecting your future
- Take advantage of now
Some day you will get old. Don’t have a pension of 401(k)? Set one up, pay as much in as you can and watch the wealth build up tax free.
On an average salary, starting early and saving 10% would leave you with a nest egg when you retire! The younger you start the better, with compound interest a small amount invested today can become a really large amount over time.
Employers will often match a certain amount of what you save in a retirement plan. You should try to take this benefit if you can, it may seem painful now but it’s worth it. Don’t think of it as money lost but money gained and put away for a period in your life when you might really need it.
This may seem like a long time away, but your money-making strategies need to be short, medium and long term. Think about your Parents or Grandparents. What would their life be like today if they had no savings or pension?
They would have no quality of life, no healthcare and no life.
Don’t let that happen to you!
The tips in this article may not cover everything. Try to use even some of them and use them regularly whilst always trying to improve and you will have more money in your wallet and be able to really enjoy the best time in your life.
You will never have more freedom and less responsibility than now. Make good decisions now and lead a happy life.
Good luck!
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