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8 Financial Goals to Aim For in Your 20's
When I was in my 20's I was living at home (cheap board!) and working at a job I loved (great salary, nice people, lots of interesting things to do including travel). The world was my oyster so to speak and I wanted for nothing.
I'd be paid on the 15th of each month and I was so proud of myself because straight away I'd put aside board money, lunch money (yep, I bought lunch every day), petrol money, my car payment (yep again, I had a car loan, just a small one but still…), hairdresser money, going out money, clothes shopping money and so on until it was all gone. I was budgeting (sort of) and so proud of myself. Not many of my friends "budgeted" and by mid-month they were out of money and borrowing off parents or using their credit card.
When I look back at how much money I wasted I cringe. Early retirement may not be just a dream if I'd been even smarter with my money than I was and built decent savings, invested in my superannuation earlier and invested wisely with my cash.
When you're young the future seems a long way off, but that future is tomorrow, and the next day, and every day after that. If you're in your 20s today and not preparing for your future you are wasting golden opportunities, opportunities that you won't get again.
We have a lot of younger Cheapskates Club members, some still in their teens, who have the perfect opportunity to set themselves up for a debt free, cashed up future today. While I'm speaking specifically to Cheapskaters in their 20's, the advice applies to everyone, regardless of age. You'll just work a little harder and it will take a little longer the older you are - but you too can get set up for a debt free, cashed up life.
Getting off on the right financial foot in your 20’s can pave the way to greater financial wealth later in life. Instead of making positive inroads to financial independence, many young adults create negative financial situations that can take many years to resolve. A few wise moves in your 20’s can pay off down the road.
See if you can accomplish these goals before your 30th birthday:
1. Have financial goals. Having financial goals is an effective first step to reaching financial independence. A person’s bank account may demonstrate whether or not they have set any financial goals.
· Set some long and short term money goals. Then, track your progress toward meeting them.
2. Acquire all the insurance you need. In our 20’s, many of us still live like we’re teenagers. But it’s important to be prepared for the worst. Protect your belongings, health, and income.
3. Establish an emergency fund. Too many people live payday to payday. An emergency fund will allow you to handle those inevitable financial bumps in the road. Whether it’s the loss of a job or a blown transmission, you’ll be able to handle it. The ultimate goal is to accumulate twelve months of living expenses, but even a few thousand dollars is helpful.
· A simple savings account is an effective way to get started. Set aside a little from each pay and you’ll eventually have a nice little nest egg.
4. Max out your superannuation. Check with your paymaster for the maximum allowable voluntary contribution then set the payments up to be automatically deducted each pay period. This might be a stretch when you’re 22 years old, but you can pull it off if you make this goal a priority. You’ll get the maximum benefit from voluntary contributions but more importantly you’ll have the power of compounding interest working for you for many, many years.
5. Contribute enough to receive full benefits on any employer-matched or government matched retirement accounts. Any matched contributions you receive are equivalent to free money and who doesn't like free money?
6. Create a second source of income. Find another source of income that provides at least $500 a month. It’s a great cushion against any unforeseen expenses. It can also be useful for building your emergency fund or adding additional funds to your retirement account.
I know you want to be out there having fun on the weekend, but it's just for a short time and you can do anything for a short time. It may be washing dishes at the local Chinese restaurant or delivering pizza or mowing lawns or refurbishing old computers or baking cakes to sell at the local market. Whatever you do, it's not forever. You have goals, and those goals have time limits so you know when you'll be back to being carefree on weekends again.
· There are plenty of freelance opportunities available online that can easily provide $500 or more per month and are flexible enough to accommodate any schedule.
7. Become a homeowner. It’s debatable whether renting or buying a home is better in the long run. But, having a place to call your own has many advantages. Most importantly, you’ll build equity over time. Home ownership is a form of forced savings.
· Once you’ve settled in and expect to be in one place for a few years, give home ownership careful consideration.
8. Be free of student loan and credit card debt. Most HECS/HELP paybacks don’t kick in until you’re earning over the compulsory payback threshold (for the year 2015-2016 it is $54,126 and is adjusted annually). Repayments are calculated as a percentage of your income and are on a sliding scale. But the best thing to do is try to be free of your student loan debt before your 30th birthday. The same goes for credit card debt.
· Avoid creating unnecessary debt. It’s like running against a wind that won’t stop blowing.
Accomplishing as many of these goals as possible will help to ensure that your middle age is free of financial struggles. A strong financial foundation created in your 20’s can pay off for the rest of your life. Strive to achieve these goals and formulate your own. Planning and self-restraint are useful to your financial well-being.
I'd be paid on the 15th of each month and I was so proud of myself because straight away I'd put aside board money, lunch money (yep, I bought lunch every day), petrol money, my car payment (yep again, I had a car loan, just a small one but still…), hairdresser money, going out money, clothes shopping money and so on until it was all gone. I was budgeting (sort of) and so proud of myself. Not many of my friends "budgeted" and by mid-month they were out of money and borrowing off parents or using their credit card.
When I look back at how much money I wasted I cringe. Early retirement may not be just a dream if I'd been even smarter with my money than I was and built decent savings, invested in my superannuation earlier and invested wisely with my cash.
When you're young the future seems a long way off, but that future is tomorrow, and the next day, and every day after that. If you're in your 20s today and not preparing for your future you are wasting golden opportunities, opportunities that you won't get again.
We have a lot of younger Cheapskates Club members, some still in their teens, who have the perfect opportunity to set themselves up for a debt free, cashed up future today. While I'm speaking specifically to Cheapskaters in their 20's, the advice applies to everyone, regardless of age. You'll just work a little harder and it will take a little longer the older you are - but you too can get set up for a debt free, cashed up life.
Getting off on the right financial foot in your 20’s can pave the way to greater financial wealth later in life. Instead of making positive inroads to financial independence, many young adults create negative financial situations that can take many years to resolve. A few wise moves in your 20’s can pay off down the road.
See if you can accomplish these goals before your 30th birthday:
1. Have financial goals. Having financial goals is an effective first step to reaching financial independence. A person’s bank account may demonstrate whether or not they have set any financial goals.
· Set some long and short term money goals. Then, track your progress toward meeting them.
2. Acquire all the insurance you need. In our 20’s, many of us still live like we’re teenagers. But it’s important to be prepared for the worst. Protect your belongings, health, and income.
3. Establish an emergency fund. Too many people live payday to payday. An emergency fund will allow you to handle those inevitable financial bumps in the road. Whether it’s the loss of a job or a blown transmission, you’ll be able to handle it. The ultimate goal is to accumulate twelve months of living expenses, but even a few thousand dollars is helpful.
· A simple savings account is an effective way to get started. Set aside a little from each pay and you’ll eventually have a nice little nest egg.
4. Max out your superannuation. Check with your paymaster for the maximum allowable voluntary contribution then set the payments up to be automatically deducted each pay period. This might be a stretch when you’re 22 years old, but you can pull it off if you make this goal a priority. You’ll get the maximum benefit from voluntary contributions but more importantly you’ll have the power of compounding interest working for you for many, many years.
5. Contribute enough to receive full benefits on any employer-matched or government matched retirement accounts. Any matched contributions you receive are equivalent to free money and who doesn't like free money?
6. Create a second source of income. Find another source of income that provides at least $500 a month. It’s a great cushion against any unforeseen expenses. It can also be useful for building your emergency fund or adding additional funds to your retirement account.
I know you want to be out there having fun on the weekend, but it's just for a short time and you can do anything for a short time. It may be washing dishes at the local Chinese restaurant or delivering pizza or mowing lawns or refurbishing old computers or baking cakes to sell at the local market. Whatever you do, it's not forever. You have goals, and those goals have time limits so you know when you'll be back to being carefree on weekends again.
· There are plenty of freelance opportunities available online that can easily provide $500 or more per month and are flexible enough to accommodate any schedule.
7. Become a homeowner. It’s debatable whether renting or buying a home is better in the long run. But, having a place to call your own has many advantages. Most importantly, you’ll build equity over time. Home ownership is a form of forced savings.
· Once you’ve settled in and expect to be in one place for a few years, give home ownership careful consideration.
8. Be free of student loan and credit card debt. Most HECS/HELP paybacks don’t kick in until you’re earning over the compulsory payback threshold (for the year 2015-2016 it is $54,126 and is adjusted annually). Repayments are calculated as a percentage of your income and are on a sliding scale. But the best thing to do is try to be free of your student loan debt before your 30th birthday. The same goes for credit card debt.
· Avoid creating unnecessary debt. It’s like running against a wind that won’t stop blowing.
Accomplishing as many of these goals as possible will help to ensure that your middle age is free of financial struggles. A strong financial foundation created in your 20’s can pay off for the rest of your life. Strive to achieve these goals and formulate your own. Planning and self-restraint are useful to your financial well-being.