Getting off on the right financial foot in your 20s can pave the way to greater financial wealth later in life. Instead of making positive inroads to financial independence, many young adults create negative financial situations that can take many years to resolve. A few wise moves in your 20s can pay off down the road. See if you can accomplish these goals before your 30th birthday.
1Have Financial Goals
Having financial goals is an effective first step in reaching financial independence. A person's bank account may demonstrate whether or not they have set any financial goals. Set some long-term and short-term money goals. Then, track your progress toward meeting them.
2Acquire All The Insurance You Need
Many people who are in their 20s still live like they're in college. But it's important to be prepared for the worst. Protect your belongings, health, and income.
3Establish An Emergency Fund
Too many people live paycheck to paycheck. An emergency fund will allow you to handle those inevitable financial bumps in the road. Whether it's the loss of a job or a blown transmission, you'll be able to handle it. The ultimate goal is to accumulate six months of living expenses, but even a few thousand dollars is helpful.
A simple savings account is an effective way to get started. Set aside a little from each paycheck. You'll eventually have a nice little nest egg.
4Max Out Your IRA
The contribution limits are $5,500 in 2015 for both traditional and Roth IRAs. This might be a stretch when you're 22 years old. But you can pull it off if you make this goal a priority.
Contribute enough to receive the full benefits on any employer-matched retirement accounts. For most businesses, that will mean a 401(k). Any matched contributions that you receive are equivalent to free money.
5Create A Second Source Of Income
Find another source of income that provides at least $500 a month. It's a great cushion against any unforeseen expenses. It can also be useful for building your emergency fund.
It can also help add funds to your retirement account. There are plenty of freelance opportunities available online. They can easily provide $500 or more per month and are flexible enough to accommodate any schedule.
6Become A Homeowner
It's debatable whether renting or buying a home is better in the long run. But having a place to call your own has many advantages. Most importantly, you'll build equity over time.
Home ownership is a form of forced savings. Do you expect to be in one place for a few years and settle in? Then, you should give homeownership careful consideration.
7Be Free Of Debts
Most student loan payback periods are ten years. It can be even longer if you choose to consolidate. Try to be free of your student loan debt before your 30th birthday.
The same goes for credit card debt. Avoid creating unnecessary liability. It's like running against a wind that won't stop blowing.
Accomplish as many of these goals as possible. It will help ensure that your middle age is free of financial struggles. A strong monetary foundation created in your 20s can pay off for the rest of your life.
Strive to achieve these goals. You can also formulate your own. Planning and self-restraint are useful for your financial well-being.