Four Money Tips for People in Their 20s
Budget (Photo credit: Tax Credits)
Young people in their 20s are in an excellent position to consolidate their financial position, though as this is determined by the fact that they’ve many years ahead of them, time is of the essence. The sooner young people start exhibiting frugal financial habits the faster they’ll consolidate their financial position and the broader their financial horizons will be.
1. Manage your student debt
Countless young people graduate from college with excellent qualifications that will see them snapped up in no time by employers but with large student debts that need to be effectively managed. The sooner these debts are managed the better, and it doesn’t take a genius to work out that addressing the situation as soon as possible is inherently advantageous.
Whilst you don’t need to live a minimalist existence to effectively manage your student debt, you do, however, need to address the situation as soon as you start earning a wage upon graduating from university. By setting yourself realistic, tangible goals you’ll be able to repay your student debt comfortably and hopefully be debt free by the time you look at borrowing for a car or home in the future.
2. Learn how to budget
Whether you’ve a student debt to repay or not you’ll still find it advantageous to budget and the sooner you learn how to budget effectively the better. Budgeting is important even when you haven’t debts to repay or something specific to save for because it’s simply essential for living within your means and taking into account how problematic life proves for those unable to live within their means – which is why many governments are considering introducing subjects like money management at high school level – the sooner you learn to budget the better.
For the technically inclined there are also a number of online budgeting apps and tools to help you create a budget and stick to it. There are a wealth of outstanding apps and tools available with some easier to use than others, though whatever your competency level you’ll find the following budgeting apps and tools useful – BudgetPulse, CalendarBudget, Inzolo and Mvelopes – and there are new apps and tools appearing all the time.
3. Start a pension or superannuation plan
Whilst you’re probably not thinking too seriously about retirement and your twilight years just yet, don’t overlook the fact that if you start putting away a small amount of your pay now you’ll find it much easier to retire comfortably and you won’t need to stress about making up for lost time later in life. A point should also be made here about exploring your savings options by looking at high interest savings accounts and savings plans because the sooner you start saving the more comfortable your future will be.
Starting a pension or superannuation plan whilst you’re in your 20s can make a significant difference later in life, and if you’ve already got a superannuation plan into which your employer makes compulsory contributions, don’t overlook the benefits of contributing a small amount – even a small amount like $20 a week makes a significant difference over time – whilst you’re commitment free and can afford it.
4. Get a credit rating
Although you may not need a loan at the present point in time, there’s much to be said for applying for a small personal or payday loan just to get yourself a credit rating. You don’t need to borrow much to get a credit rating though you do need to be on time with your repayments to have the kind of credit rating that makes banks and lenders want to lend you money in the future.
Chances are you’re going to apply for a loan to buy a car or home later in life, so borrowing a small amount while you’re young and commitment free – and are therefore in an outstanding position in which making repayments is simple – is an excellent way to procure a good credit rating that puts you in a favourable position when it’s time to borrow in the future.
By following these four simple yet important tips, young people in their 20s will find they’re able to get off to the best possible fiscal start in life.
Author Bio:
Payday King based in Australia provides a financial solution to clients in the form of a payday loan. They have lending policies that differ from banks and other financial institutions.
Category: Budget
