Financial Tips for Your 20’s

At this point in your life, you probably are not the most frugal when it comes to your finances. You have important things to pay for such as school, bills, and basic necessities to live. It seems simple until you incorporate all your extra expenses. If you are anything like me you love an iced coffee from Starbucks, weekends out with your friends at a karaoke bar or restaurant, and maybe even an occasional shopping trip. The question is how you balance all of the important things you need to pay for, your personal life, and the ability to save for your future. I do not have this down to an exact science and I make as many financial mistakes as any other 20-year old, but I do have a few tips that may help.

1. Prioritize What is Important.

Make a list of all the things you either need to pay for or want to pay for and list them by importance. This way you know that if you cannot afford the first thing on your list, you shouldn’t bother with the rest.

3. Pay Off Debt as You Go

There is a man by the name of Dave Ramsey, many of you have probably heard of him, he has this genius idea that I have tried using in the past. I have not been able to completely apply this method to myself just yet, but I have experimented with it. You list your debt from smallest to largest and make minimum payments on all of the debts with the exception of the smallest one which you pay off as much money on as possible. After that, you just keep applying the pattern until you are debt free.

3. Keep a Set Amount in Your Savings (and Add More if You Can)

I once saw this post online and while it may not always be practical, it is certainly worth the try. The post said that whatever you make from your paycheck, take all of the $100 bills and put them into your savings. Whatever is left that is not a $100 bill can be used as spending money. For example, if you receive a paycheck for $483, you would put $400 of it into savings and the remaining $83 is yours to keep in your checking account. Decide on a specific amount of money you always want to keep in your savings and do not take it out of your savings.

4. Work Full-time

This one is self-explanatory. It can be difficult to balance school and work but if you have the opportunity to work 40 hours a week, you should do that so you may be comfortable financially.

5. Set a Specific Amount of Money Aside for Fun

As I said earlier, I know it is tempting to go out and do fun things in your 20’s. In order to give yourself the flexibility to go and enjoy life without the risk of losing all your money, set aside a specific amount of money for fun.

6. Pay Your Bills ASAP

If you have a credit card bill, a phone bill, or any kind of monthly bill try paying them off as soon as you can. This will provide you a peace of mind knowing you took care of the important stuff.

7. Live Within Your Means

I have had many friends and acquaintances tell me they were going to buy a brand-new car or that they wanted to. I have had them tell me they were going to buy designer clothing or bags. I have had them tell me they were going to get a place that cost more than they were making. It can be tempting to try and live a life of luxury but when you are not making that kind of money, you are just wasting money. The truth is a decent used car that can get you from point A to point B is perfect especially for a college student. Living with roommates will often save you money and designer clothing is not a necessity. Living within your means is crucial during your 20’s to stay financially stable.

I hope my tips can help you stay financially smart this holiday season.