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How to Manage Your Finances in Your 20s

August 15, 2019

Your early work life in your 20s is an exciting time, but with adulthood comes responsibilities. You have your first job and are looking to get ahead in your career. It might be the first time you are living on your own.

Regardless of what your 20s hold, they herald a new financial era for you. The time has come for you to start managing your finances independently. This is a huge adult milestone and is not as easy as you might think.

What financial management strategies should you put in place?

1. Budget

With no one to bail you out when you run out of money, you need to have a budget in place. You’ve probably fantasized about living your life without worrying about how much money you have. However, this is a reality that very few people in their 20s can claim as their own.

Draw up a realistic budget by examining your monthly expenses and comparing them to your income. Don’t kid yourself by understating your costs because you’ll wind up in trouble. The best approach is to overbudget slightly for each expense so that you’re able to accommodate an increase.

2. Seek finance

One of the first things you’re going to want to buy is a car. Not being able to do so with cash, you’re going to need a loan. To get a loan your credit score, employment record, income, and budget are reviewed to see if you qualify. You’ll have to follow the same procedure if you decide to buy a house and want to secure a mortgage.

Alternatively, you might have an emergency that your budget doesn’t cover. Needing to pay it immediately, you must find a business from which you can get a payday loan. Many online services like achievefinance.com make it easier than ever before to get one.

3. Save

You need to have a separate savings account. This account should hold your excess income that remains after your expenses. Don’t be tempted to keep the money in your day-to-day account. It will quickly be absorbed into your budget, leaving you with no savings.

If you are disciplined about saving, you’ll have the funds available in the event of an emergency, such as unscheduled car repairs and maintenance. You can also have extra money to use for vacations and other luxuries.

4. Invest

In addition to your regular savings, you can use some of your excess income on investments. These include the stock market, bonds, and shares. Investments are the ideal way to make your money work for you. They are regarded as a passive income as they grow without your input.

However, there is a downside to investing. It is a risky undertaking, and it’s possible you could lose some of your money instead of making more. It is unwise to use too much of your excess income for investments as it could backfire on you.

5. Plan for the future

While the later stages of your life might seem far away when you’re in your 20s, they’re closer than you think. You need to be planning for these future events from the time you earn your first paycheck.

Here are two prime examples: The odds are that you’ll have children someday. Once they leave school, they will need to get a tertiary qualification from an institution like a college to get a good job. Start saving from the time they are born.

You need to prepare financially for your retirement. If you want to live out your golden years in comfort and security, you need to prepare for them actively.

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