Millennial Money: Trial and Error, and What You Learned in Your Twenties | Business

Your twenties are a time of soul-searching, gaining a foothold as an adult, and maybe making a money mistake.

To keep you from learning difficult paths – and to impart some knowledge when I enter my 30s – here are five silver lessons from my last decade.

Think seriously about your goals

For several years, my main financial goal was to get out as much as I wanted and leave enough money to cover my rent at the end of the month.

But in the end, it turned out that a gloomy morning and a little savings were not enough. My partner and I decided to set goals and make plans for them. We wanted to buy a house. This meant moving to a cheaper city to increase savings.

Tip: Know your passion to know your goals.

Pam Rodriguez, a certified financial planner in Sacramento, Calif., Has identified what brings you joy and offers to create a financial plan to create more of those moments.

“Personal finance is a lot more emotional than math equations,” says Rodriguez. “You have to add up the numbers, but unless you feel strongly about something, you won’t take any action. “

For example, if you want to buy a house to accommodate your friends and family, identify how much down payment and closing costs you need and work towards that goal of savings over time.

Understanding the Budget System

For most of my 20s, my budgeting system has been defined by its absence. Eventually I sucked it up and started tracking my spending. At first I felt lazy if I didn’t record where all the penny was going. But I quickly realized that keeping a simple budget was my style.

Tip: Please select the budgeting system It reflects who you are.

If you are a super analytical person, a detailed budget spreadsheet may be right for you. But for convenience, a budgeting app can work.

Whatever your budget, it’s important to at least understand the money that comes in and goes out each month.

Sidney Divine, the Certified Financial Planner from Atlanta, said:

Learn from one’s mistakes

Did you know that if you are working under contract and you don’t have enough money to cover your taxes, you may have a monthly payment left to the IRS for the next few years? In my early twenties, I learned this the hard way.

Tip: Find the cause of the problem and find a solution.

In my case, the problem was that I was ignoring my finances and not thinking about my tax obligations. I solved the problem by actively managing my budget and paying off my tax debt. It also helped me find a new job that wasn’t a 1099 gig.

“You have to understand: is this the same mistake you made several times? Is it a model? Says Christine Paperian, Phoenix’s official financial planner. “If this is a new mistake, now you have the opportunity to get back on track. It is rarely too late to change your behavior or habits.

For example, if you’re used to delaying payments, consider setting up automatic bill payment so you don’t have to worry about keeping track of different due dates.

Building a financial fortress

The past year has been a radical course of instability. The recent crisis has been extraordinarily severe, but we can expect unforeseen financial challenges for life. For example, a broken alternator in my car once depleted my emergency funds, but at least I was able to avoid borrowing to cover the costs.

Tip: Saving a must.

“We will focus on building emergency funds,” Rodriguez says. “Everyone needs it because everyone is facing an emergency. “

Consider using direct deposit to send a portion of every payday to your emergency savings account, or set up an automatic transfer from your checking account to your savings account.

Take advantage of this long-term horizon

Young people can be wasted by young people, and their financial time is wasted too, at least for those who don’t catch it.

I made a lot of mistakes in my 20s, but saving for retirement is one area I haven’t overlooked. As soon as I confirmed the power of compound interest on my retirement calculator, I set up a regular contribution on my 401 (k).

Tip: Use these years to increase your retirement savings.

For whatever reason, your 20s will have a ripple effect on your retirement year. And life can get more complicated later on, especially if you’re buying a home and starting a family, making it harder to save for retirement. Hiding more money now can prevent you from catching up later.

Millennial Money: Trial and Error, and What You Learned in Your Twenties | Business

Source Link Millennial Money: Trial and Error, and What You Learned in Your Twenties | Business

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