Do you feel like your 20’s doesn’t make you an adult yet? Well, financial experts think that you may be getting it all wrong about your age and financial habits. You can also learn from Warren Buffet, a multi-billionaire who started building his business empire when he was only 11, that age shouldn’t be the barrier. Believe it or not, your 20s is a good time to start learning about financial literacy and good money habits. Here are four beneficial financial habits you should cultivate if you are looking forward to creating a great future. 

Start budgeting

Budgeting involves taking control of how you spend your money, and it will teach you self-discipline. Although it may seem too restrictive for your 20s, due to limited resources, the efforts can pay off in the long run due to limited resources. The point is that if you can’t budget with little resources, you won’t be able to do it as your income (hopefully over time) increases. A good budget helps you live comfortably within your means, and you can start by jotting down your expenses and then allocating your monthly paycheck to cover them. Thankfully, with the aid of cash envelopes or a digital systems (I use GoogleSheets), tracking your expenses shouldn’t be too much of a task.

Invest wisely

While you may be able to buy your first stock before your teen years like Warren Buffet, you can change your investing habits right now in your twenties. Investing can actually be in more areas of your life than just the stock market. Try your best to invest only in high-quality products as cheap items can be expensive in the future due to their poor quality. This was definitely a lesson I learned that hard way! For instance, paying $500 for a car may seem like a smart decision, but in essence, that cheap investment may cause you financial stress if you’ll have to be replacing parts every week. Same goes for the gym – my Crossfit gym is pretty ‘expensive’ but it’s an investment in my health and it’s a gym I regularly use. So, take your time to invest in quality products once and for all.

The same principle does apply to investing in the stock market, and your 20’s are a great time to get started. Definitely invest in your 401(k) at work, and outside of that consider investing in index funds, which are low cost high quality!

Pay off your debts

A debt isn’t necessarily a bad thing, provided you know how to use the money. Some students have taken loans to invest in their education, and this investment pays off in the long run with a great career. So, don’t necessarily avoid debt just because it’s debt, instead be smart and take on debt that’ll help you grow in the future. Nevertheless, a debt can also become a financial burden throughout your twenties. So, try as much as possible to settle your credit card debts and your student loans in time. Now is the time to get aggressive! Being free from debt as best you can opens up many more opportunities to grow financially.

Improve on your financial literacy

Another good money habit to cultivate in your twenties is constantly improving on your financial literacy skills by reading wide and listening to financial gurus. Whether this is reading your favorite financial blogger, listening to podcasts, or asking questions of those older and more successful, always be learning! So much of being successful with money is learning little tips, tricks and strategies on how to better manage and help your money grow.

Financial stability is key, especially if you’re a breadwinner in your twenties. Aka, start building up a safety net to ensure you’ve got a strong base. Definitely have an emergency fund and start taking advantage of insurance policies, whether on your car, house (owning or renting) and even your future wages (i.e. disability). It’s also wise to at least have some sort of life insurance in your twenties and it’s not the worst decision to have a policy like a universal life insurance package or term life policy. This will safeguard the financial security of your loved ones, in case your life ends prematurely.

Summary

I know there’s a lot going on in your 20’s, with a lot of things competing for your attention and money. Definitely live it up, just do it financially responsibly and use your 20’s to start building good habits and a good financial base that’ll help you in the long run!

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