The 20s are a time when people think about all the fun and freedom that comes with becoming an adult. However, more important than this is the responsibility that increased freedom brings with it. Financial planning and goal-setting is paramount during this stage of life.
When embarking on a financial game plan for one’s future, it is important to formulate realistic goals that allow for short-term, mid-term, and long-term plans to be established in a way that are feasible, while also meeting one’s specific needs and desires.
Regardless of the nature of your goals, early and often is the name of the game when it comes to saving. For example, if someone in their 20s saves $200 per month and invests it, earning 8% for 40 years, they will have approximately $626,000 to show for it if they choose to retire in their 60s.
While saving is the main engine for wealth building, avoiding unnecessary debt is right behind it. One must be careful, however. Even positive goals such as a pursuing a college education can significantly hamper one’s financial progress, especially if student loans get out of hand. Consider public or community colleges at a fraction of the cost of private schools if the latter causes you to take on an excessive amount of debt.
While there are countless other examples of how to tackle finances in your 20s, it comes down to two simple points: avoiding unnecessary debt at all costs, and saving small and soon instead of large and later.