There’s no question that your 20’s is a very precious phase of your life. There’s an anxious but exhilarating sensation about becoming an adult, leaving home, and being financially independent. Regardless of whether you launched a career, a university degree, or spent time traveling overseas and gaining life experience, your 20’s is a significant decade from both a personal and financial point of view. Regardless of what path you go with, the one constant that will continually remain in your life is money.
The fact of the matter is, the earlier you start saving money and building wealth, the better your financial scenario will be in the future. Regardless of whether you wish to get married, start a family, or invest in a home, there are various financial targets that every person in their 20’s should strive to achieve to secure a better a future. In this post, we’ll be taking a closer look at these targets and how you can start building healthy financial habits.
Make a budget
Establishing healthy financial habits begins with learning how to budget. Being able to spend less money than you make is the key to saving money, so start taking control of your finances by establishing a budget and sticking to it! With a paper and pen, list your monthly income and expenses. Study your expenditures to uncover which can be reduced, or which can be cut out entirely. Some ways to reduce your expenses are opting to eat at home instead of eating in restaurants and replacing your Cable subscription to streaming services like Netflix instead.
Eradicate your debts
Whether or not you’ve travelled the globe or have student loan debts, the faster you repay these debts, the better. Interest compounds as time passes, so paying off your debts by cutting down expenses or working a second job could save you thousands of dollars in only a couple of years. These savings can then be invested in a high-interest term deposit as an example, which will place you in a considerably better financial position than merely making the minimum monthly repayments on your debts.
Build an emergency fund
Life hardly ever works out the way you planned, so it’s important to be prepared for any unanticipated changes that may be required. You may end up unemployed, or in an incident that prevents you from working, so having an emergency fund will be able to give you a bit of breathing room when you need it the most. Financial advisors advise that all individuals should have a dedicated emergency fund that is capable of supporting their living expenses for 3 to 6 months.
Insurance protects you financially from any damaging consequences, for example income insurance in the event you lose your job, medical insurance for sudden medical expenses, and vehicle insurance in the event your car is stolen. Although it’s not always wise to get every type of insurance available, it’s unquestionably a clever idea to evaluate your individual situation to see which is best suited to you. For example, medical insurance is recommended for everyone due to the high costs of uninsured medical treatment. Without insurance, an unplanned incident may cause substantial damage to your financial situation.
Invest in a diversified portfolio
If you’ve been able to save a certain amount of money that is otherwise sitting idle in the bank, think about investing this money in a high-interest term deposit. After you’ve got more money saved, think about purchasing some property, or investing in gold. The key to a sensible investment portfolio is ‘diversification’, meaning that you regulate the risks of investment by putting your eggs in different baskets, so to say.
Seek financial help immediately
If, for whatever reason, you’ve found yourself in financial trouble, the best advice is to seek financial assistance immediately. Lots of people battle with financial problems for several years before finding help, which puts them in a worse position as their debts will only compound with time. The sooner you seek financial assistance, the more options are available to you, so if you need any support with your financial situation, talk with the professionals at Bankruptcy Melbourne on 1300 879 867, or visit our website for more information: www.bankruptcymelbourne.com