10 Financial Goals for Your 20s That Will Make You Rich

Being in your 20’s is a fabulous, exciting time in your life. The excitement of leaving university, starting a new job, and getting your own place; the list goes on. There’s newfound freedom and independence. A chance for making many decisions on your own! But many times the importance of setting financial goals gets overlooked. After all, you may be just out of college, still in debt, and not making much money at your first job. But even so, while it may seem like getting your financial house in order is something you can do later down the road when you’ve settled a bit, the truth is that there are steps you should start taking NOW that will lay a solid foundation for building wealth as you get older.

These steps can make a HUGE difference to your financial security in your 30s. So it’s a sensible idea to start TODAY — here and now. There is a lot you can do. But here are the 10 MUST DO financial goals you should pursue and accomplish in your 20s that will make you rich!

1. Create a Budget and Learn to Love It

Creating a budget and tracking expenses can be a slightly painful experience if you haven’t done it before. But trust me — your budget is a friend in this journey. If you don’t know how much you spend versus your income then how can you plan your future? Before you can spend or save money you need a budget.

It’s that simple.

Everything — saving, paying off debt, building good credit — is much easier when you have a budget plan in place. You can do it on an Excel sheet or a notepad or use one of the many apps such as You Need A Budget to get started. Make up your categories based on essentials and your specific spending habits. The categories will probably have fixed expenses such as rent, utilities, transportation, insurance (if you have it — more on that later). It will also include variable expenses such as groceries, shopping, and entertainment. See what you are left with. Now set aside money to pay off your debts and amount you’d like to save every month. Having taken care of your main obligations NOW you can choose to spend the money that’s left over without worrying about whether you are spending too much.

Huge relief. That’s what you’ll get with the budget in place which has allocations for paying off debt, savings, and spending.

2. Save, Save, Save

So one of the categories in your budget is the amount you plan to save. It does not need to be a large amount. Just needs to be consistent. These savings are IMPORTANT. Why? because these savings that you will start in your 20’s will help you create an emergency fund. Beyond that, they will help you to buy that car or house that you want in the future. SET FINANCIAL GOALS. And based on your short, medium, and long term financial goals you should set aside an appropriate amount every month. Or saving for the sake of saving can be a bit of a drag.

Create two savings accounts — one for an emergency fund (below) and another one for longer-term savings. Again, it does not have to be large sums just consistent sums.

3. Create an Emergency Fund

OK so this is an important one. We all know life sucks from time to time. Layoffs happen. Stuff you thought was going right suddenly goes wrong. You may have to live on a tight budget for a some time. And you want to be prepared for that eventuality. This is where an emergency fund comes in — to cover your basic living expenses for up to 6 months should sh*t happen. So create that additional savings account that is your emergency fund. Stock it with 6 months of living expenses and then Don’t. Touch. It.

4. Pay Off All Your Debt

This means all of your debt, the largest proportion of which will likely be student loans. But it includes any credit card debts you may have. You can start with paying off the smallest debt which will keep you motivated or the debt with the highest interest rate. Either way, this should be a part of your budget. Paying off your debt makes hitting financial goals and saving money much easier, and you will feel a huge relief once you have made that final payment.

5. Stop Impulse Spending

You may find yourself living from paycheck to paycheck and wonder what’s going wrong. The trick is to take a hard look at your budget and find the areas you can cut your expenses. It may be dining out too often or it may be impulse trips to your grocery store. Once you find whatever it is, find ways to reduce it. If it’s groceries then ways around it include making a shopping list before you hit the store. Or if it’s eating out too often then you may consider meal prepping on the weekends. Spend less than you earn and you won’t find yourself living paycheck to paycheck.

6. Start Investing

THIS IS A BIG ONE. Investing smartly can grow your money like few other activities can. I regret not having done it in my 20’s. You can invest in growth stocks (that you have to manage more actively) or dividend stocks that can generate a fair bit of passive income. Whatever your style of investing, the first step is to educate yourself about investing and then start small. Investing done right and from early on can generate significant sums of money within a few years. Financial freedom — gets you much closer to it.

7. Can You Manage a Side Hustle?

The reason this is a question is because your job/studies may not allow you to pursue a side hustle.

But if you have some extra time… go for it. Just know there are no get rich quick schemes. However, there are several legitimate ways you can make money from home so rid yourself of inertia and procrastination and watching TV shows, and find yourself a side hustle that pays.

8. Start Saving for Your Retirement… With Your Employer

Many employers offer a 401(k) plan. It is an employer-sponsored retirement savings account into which you can contribute part of your pre-tax income. There is, however, an annual cap on how much you can contribute. Many employers who offer the 401(k) plan will offer a match up to a certain percentage which doesn’t count toward your annual cap. If you can get on this 401(k) you will be saving with your pre-tax dollars which can generate a tidy sum over time.

9. Get Insurance and Pay Your Taxes

You should always have health insurance, even when you are young and healthy since you never know when you may need it. You should also have car and life insurance but be sure to shop for the best deals on all your insurances.

TAXES — Sigh, yes we have to pay them.

And if you don’t stay on top of taxes there are penalties. So, it is not worth procrastinating. Pay your taxes on time.

10. Read and Learn About Personal Finance

If you are reading this blog then you are already ahead. While personal finance and money play a huge role in our lives, there is no explicit guidance on how we should prepare for it. Well, there SHOULD be. Because most people end up winging it. But if you are smart, you’ll go out and get yourself educated on all topics of personal finance and be the master of your financial future!

The Bottom Line

It is NOT easy to get all of the financial goals above going but SO WORTH IT after a few years.

So are you ready to take control of your financial goals in your 20s and grow rich?

Originally published at https://bestofhealthandmoney.com/