20s is the time when we witness many big transitions in our life. We face the biggest turmoil of our lives in our 20s. Our college life ends and work life begins. We marry our love or fall in love with the one we marry. Adapting to these sudden changes is an uphill battle for a young individual. The biggest hurdle comes with managing our finances. To be financially successful in your 20s, there are 5 unwritten commandments that you must follow:
Once we are out of our college life, we start running behind jobs. But if you want jobs to knock your door, then you must develop a skill which has got demand in the market. Don’t think in terms of just getting a job but about your career. The skill you want to develop shouldn’t only be relevant in the present but also have a promising future.
Let’s face it, we are broke in our 20s before we get our first job. We do not have the habit of making a budget or following one if we happen to make it. Even after getting a job, we witness mayday soon after pay day. The important thing here is to understand the difference between our need, want and dream. Once you understand this, you can make ideal budgets. Key thing here is to develop the habit of following it religiously.
Immediately after you get your first job, don’t start spending your income lavishly. I know that it is hard to resist but before you start looking for ways to spend it, you must make sure you are not head over heels in debt.
Most of us spend first 20 years of life being financially dependent on our parents. They take care of all our financial needs and we fail to realize that the financial journey isn’t always smooth. To handle any crisis in life which requires money, you must have some liquid cash with you. You can create an emergency fund or rainy day fund and stash enough cash to last 3-6 months in times of need.
Mayhem is omnipresent and its your responsibility to save yourself and your interests from it. Getting insured provides you a financial backup and prevents you from becoming financially bankrupt. Health insurance is the first insurance that you should avail once you start earning money.
This point is a no-brainer. Not everyone wants to work their whole life. If you want to retire early, you should start saving early. Your retirement will be as sweet as big your retirement funds will be.