5 Things To Do In Your 20s To Ensure Your Financial Success
Good money habits can and should be implemented at any point in your life. Whether you’re 21 or 51, managing your money wisely will have a benefit to you and those closest to you. However, if you implement these good habits early in life you take advantage of what time can do to your money. This can be a very good thing! After all, our money is worth more when we’re young due to inflation!
Click here to read more about Inflation & How It Affects Your Buying Power!
Here are 5 Things To Do In Your 20s To Ensure Your Financial Success:
Increase Your Knowledge & Invest In Yourself — Investing in yourself can prove to be more fruitful than even investing in the market. The ROI of increasing your knowledge is extremely high. If you equip yourself with the tools to be successful in the future you give yourself a roadmap to achieve your goals. The worst place you can find yourself is not knowing what success looks like while also not having the knowledge of how to get there. With no plan, there will be no result, or rather there will be no desired result. If you wonder about life hoping you will eventually end up someplace desirable you may find yourself somewhere you didn't expect or you don't want to be. Make learning a lifelong endeavor. When you're equipped with the knowledge of how to win you can put a plan in place to get there. I invest in myself by reading lots of books, listening to podcasts, and watching quality videos on YouTube. Click here for a few of my book, podcast, and YouTube recommendations.
Get Out Of Debt & Stay Out Of Debt — Debt can be an absolute financial dream killer when you’re young. If you borrow until your eyes bleed in your 20s you will find yourself behind the 8-ball, struggling to dig yourself out of the hole you made for yourself. I certainly wasn’t the worst offender of this, but I did make poor decisions in my early 20s and before I knew it I found myself in a decent amount of debt. Based on some of the things I’ve learned I couldn’t bring myself to invest when I had debt hanging over my head. I spent so much of my time and resources paying this debt down, which would have been money I could have kept and invested for myself if I had made better choices early in life. It makes no sense to invest your money hoping to make a 7%-10% return when you’re paying 18%+ on your credit card balance or have a huge stack of student loans. The best return you can make on your money is the guaranteed return you get when paying off your debt! Not only that, but the peace of mind you get when you don’t owe anyone money is invaluable. In your 20s you have the option to stay out of debt, and if you do you can start investing early and reap the reward that years of compound interest can offer. If you want to see the power compound interest can have on your money visit www.millennialecon.com, click on the “Resources” tab, and click on the Compound Interest Calculator link.
Begin Investing — You don’t have to be a sophisticated investor, and you don’t have to have the world economy figured out, but start investing in your 20s! As mentioned before, your money is worth more when you’re young. If you can start taking advantage of compound interest early in life you will have a great headstart in building wealth. I like to invest in Mutual Funds and ETFs. By the way, if your company offers a matched 401k investing plan start doing that right now!
Get A Taste Of Success Making Passive Income — Most people think you have to be an entrepreneur to build a stream of passive income, but that simply isn’t true. Investors generate passive income not only from the increased value of their investments but from dividend payouts. According to Investopedia, a dividend is the distribution of some of a company’s earnings to a class of its shareholders. I won’t get too far into the weeds here as explaining what dividend investing is deserves its own article, but dividend payouts occur typically every quarter from the companies you own shares of. I remember the first time I received a dividend payout. I wasn't expecting it. I didn't really know how dividends worked at the time, but I saw several deposits in my brokerage and upon further investigation, I learned these were dividend payouts from the companies I owned shares of. This was my first taste of passive income and it was awesome! When I made money without working it motivated me to continue to feed the machine so these payouts only increased as I got older. Once you get a taste of passive income you will want to keep the good times rolling!
Increase Your Income — This one is pretty self-explanatory, but the more money you make the money you will have to pay off debt and invest. Choose a career that has good earning potential and produce good work for the organization you’re employed by. Strive for that promotion. As David Goggins likes to say, Be Uncommon Amongst Uncommon People. Plenty of young people spend their early years not taking their careers seriously. I’ve seen it many times. Don’t do this. Focus on increasing your income so you have margin later in life to use that extra income for good. But remember that a large income can be swallowed up by poor habits! You can still be living paycheck to paycheck even if you make a million dollars a year. Your career and salary are a tool for achieving your goals. Don’t waste it.
I hope these tips help you achieve your financial goals. If you incorporate these points early in life you’ll be well on your way to a great financial future!
Talk soon,