How to be smart with money in your 20s

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In your 20s, you’re probably just starting to earn and spend your own money. 

You want to be smart with your money and do everything possible to secure your financial security. That means making a budget and sticking to it, living below your means, investing in yourself, and being mindful of your credit score. It also means taking advantage of opportunities to make your money work for you.

So if you’re looking for how to be smart with money in your 20s, follow the 10 tips below!

How to be smart with money in your 20s

Managing money in your 20’s

One of the biggest challenges you face in your 20’s when it comes to money is that you probably don’t have a lot of experience with it and weren’t taught much about it at school or home.  

This means that you can be prone to making mistakes with your spending, not investing properly, and not always making the smartest choices when accessing credit and debt.

This can lead to a lot of financial challenges down the road. That’s why it’s so important to learn about money and how to handle it correctly from an early age.

If you can get smarter with your money now, you’ll be better later in life.

It’s hard enough to stay disciplined when it comes to spending, but that becomes even more difficult when so many tempting offers for credit cards and loans are thrown at you each day.

However, if you don’t learn how to get smart about your finances now, you’ll regret it later on. It’s never too late or too early to start getting smarter with your money!

1. Make a budget and stick to it

Making a budget is one of the most important things you can do if you want to be smarter with money in your 20s.

This involved giving every dollar/pound/Euro a job to do and not just letting them slip through your fingers.

-Creating a budget

Creating your budget is the first step in getting smarter with your money. You need to figure out how much money you have coming in and going out each month to plan your spending accordingly.

There are a lot of different tools and resources online that can help you create a budget, so don’t be afraid to do some research and find the one that works best for you.

-Sticking to a budget

Once you’ve created a budget, the next step is to stick to it.

This can be difficult, especially if you’re used to spending freely.

But if you want to be smart with your money, you need to be disciplined and make sure you’re sticking to your budget. There are a few different ways you can do this, such as setting up alerts or notifications on your phone or computer so you always know where you stand financially.

-Revising your budget

Your budget is never set in stone, and it’s important to revise it periodically. As your income or expenses change, so should your budget. Don’t be afraid to make adjustments as needed to always stay on top of your finances.

-What to include in a budget

When creating a budget, it’s important to include all of your sources of income and expenses. This way, you have a complete picture of where your money is going each month. Some common expenses to include in your budget are:

-Housing costs

-Utilities

-Transportation costs

-Food costs

-Clothing costs

-Entertainment costs

-How to adjust your budget when needed

When your budget is first created, it’s important to make sure it’s as accurate as possible. But as time goes on, things may change, and you may need to adjust your budget. Here are a few tips for how to do that:

-If your income decreases, your budget should also decrease

-If your expenses increase, your budget should also increase

-If you go over budget one month, you’ll need to try and make up for it the next month

-Review your budget regularly and make changes as needed

-Budgeting for specific expenses

-Housing costs

One of the biggest expenses for most people is housing costs. If you’re not careful, these can quickly eat up your budget. There are a few things you can do to keep housing costs under control

-Look for affordable housing options

-Consider sharing a home with roommates

-Find ways to reduce your energy usage

-Negotiate a lower rent price

Another common expense is utilities. Again, there are a few things you can do to reduce these costs

-Turn off electronics when they’re not in use

-Unplug appliances when they’re not in use

-Install a programmable thermostat

-Creating a savings plan

It’s hard to save money when you don’t have a lot of extra cash to work with

Even if you do manage to save a little bit each month, it can be difficult to make your money grow

A savings plan is the answer. With a savings plan, you can make your money work for you and watch it grow over time. Here are a few tips for creating a successful savings plan

-Start small and gradually increase your savings amount as you get more comfortable

-Set aside money each month specifically for saving

-Choose an account that offers good interest rates

-Be patient and stay disciplined – it may take time, but your savings will

2. Don’t spend money you don’t have

One of the smartest things you can do when it comes to your finances is to not spend money you don’t have.

This may seem like common sense, but it’s something a lot of people struggle with.

If you’re constantly spending more than you’re earning, you’re going to end up in a lot of debt. And that’s not a place you want to be.

So, if you want to be smart with your money, start by learning how to live within your means.

-Create a budget and stick to it

-Avoid unnecessary expenses

-Be mindful of your credit score

-Make your money work for you

-Delay your spending to make sure you really need or want the item.

3. Invest in yourself by taking courses and learning new skills

One of the smartest things you can do is invest in yourself when it comes to your financial future.

And I don’t just mean buying stocks and bonds.

I mean by taking courses and learning new skills.

When you’re knowledgeable and skilled in a variety of areas, you’re more likely to be successful in life. And that includes being successful with your money.

So, if you want to be smart with your money, start by investing in yourself. Take courses and learn new skills. It may be challenging at first, but it will definitely be worth it in the end.

-Work relates courses

-Hobby or interest related courses

-Money management courses

-Investing courses or coaching

Life and financial planning coaching or mentoring  

5. Have an emergency fund for unexpected expenses 

An emergency fund is an important part of your financial security.

You can access a savings account when you need it most – for example, you have an unexpected expense. If you don’t have an emergency fund, you’ll likely have to turn to credit cards or loans when something unexpected comes up, and that can get expensive quickly.

Start by setting aside money in a savings account specifically for emergencies. That way, you’ll always have access to funds when you need them most. And don’t worry – even if you can only save a little bit each month, your emergency fund will grow over time.

-Start small and gradually increase your savings amount as you get more comfortable

-Set aside money each month specifically for saving

-Choose an account that offers good interest rates

-Be patient and stay disciplined

– it may take time, but your emergency fund will grow over time

6. Be mindful of your credit score and use credit wisely 

A credit score is a number that reflects your creditworthiness and is used by lenders to determine the interest rate you’ll be charged on a loan.

The higher your credit score, the better your interest rate will be. And the better your interest rate, the less money you’ll end up paying in the long run.

Make sure you’re aware of what it is and how it’s calculated. And if it’s not as high as you’d like it to be, work on improving it. There are a number of things you can do to boost your credit score, including:

-Pay your bills on time

-Maintain a good credit history

-Keep your credit utilization low

-Get a copy of your credit report

-Check and correct for errors on your credit report

– Pay off the debt you have

7. Invest money to make your money work for you 

Investing your money remains one of the best ways to grow your money and make it work for you even as you sleep.  

There are a number of other ways to make your money work for you. The key is to find an investment that fits your needs and goals. Here are a few ideas to make your money work for you

-Invest in courses and learn new skills

-Invest in real estate

-Invest in low cost globally diversified index funds in the stock market

-Invest in a business, including creating your own.

8. Make a plan for your financial future 

Making a life and financial plan is one of the smartest things you can do for your future.

You know what you need to do to reach your goals when you have a plan. You’re more likely to stay disciplined and stay on track when you have a plan to follow.

Write down your goals and figure out what you need to do to achieve them. Make sure your plan is realistic and achievable, and then stick to it. If you need help creating a financial plan, we can help you here.

-How to create a life and financial plan

-Start by writing down your goals

-Figure out what you need to do in order to achieve those goals

-Figure out the money you will need or need to create

-Start taking action

-Make sure your plan is realistic, achievable, and fits into your lifestyle

-The benefits of creating a life and financial plan

You always get somewhere quicker when you know where you are going.

You know what you need to do to reach your goals when you have a plan. You’re more likely to stay disciplined and overcome the obstacles in your way.

9. Stay disciplined with your spending 

When it comes to your financial future, discipline is key.

If you want to be smart with your money, you will need to:

-Manage your money well

-Save first and spend what’s left, not the other way around

-Be mindful of your spending habits

-Avoid overspending

-Remembering what you want most vs right now

10. Seek out advice from those who are financially savvy 

It’s important to seek advice from financially savvy people who have already had some life and financial success.

That means talking to a financial planner, getting coaching from a money expert, or finding a mentor who can help you stay on track.

Talking or listening to financially successful people face to face, through podcasts financially, books or vlogs can help you:

-Understand what financial literacy is

-Understand your own financial situation

-Learn about different types of investments

-Understand the importance of saving money

-Find out about different ways to become wealthy

-Discover how to get out of debt

Final thoughts: how to be smart with money in your 20s

When you’re in your 20s, it’s important to start thinking about your financial future.

You want to be smart with your money and do everything possible to secure your financial security.

That means making a budget and sticking to it, living below your means, investing in yourself, and being mindful of your credit score. It also means taking advantage of opportunities to make your money work for you.

So, if you’re looking to be smart with money in your 20s, follow the above tips, and you will be well on your way.

If you want help with planning for your favourite future, sign up for our newsletter and start your financially happy journey.

FAQ how to be smart with money

1. How can I start being smart with my money?

The best way to start being smart with your money is by creating a life and financial plan. Write down your goals and figure out what you need to do in order to achieve them.
Make sure your plan is realistic and achievable, and then review and adjust as needed.

2. What are some tips for staying disciplined with my spending?

If you want to stay disciplined with your spending, start by creating a budget and sticking to it. Resist the temptation to overspend, and remember that every penny counts. It may be tough at first, but it will definitely be worth it in the end.

3. I’m not very financially savvy. Where can I go for advice?

If you’re not very financially savvy, the best place to start is by reading and listening to financially savvy people like Warren Buffet, Jack Bogle or finding a mentor who can help you stay on track.

4. What things should I avoid if I want to be smart with my money?

You should avoid overspending, living beyond your means, and being careless with your credit score. If you can avoid these things, you’ll be on the right track to financial success.

5. What’s the best way to invest my money?

The best way to invest your money will vary depending on your individual goals and circumstances. However, some general tips include diversifying your investments, investing for the long term, and being mindful of fees and taxes. You can also talk to a financial, advisor, planner or coach to get specific advice, education or guidance tailored to your unique situation.

Final thoughts: How to be smart with money in your 20s

When you’re in your 20s, it’s important to start thinking about your financial future.

You want to be smart with your money and do everything possible to secure your financial security. That means making a budget and sticking to it, living below your means, investing in yourself, and being mindful of your credit score.

It also means taking advantage of opportunities to make your money work for you. So if you’re looking to be smart with money in your 20s, follow the above tips.

If you would like help with your financial planning, sign up for our newsletter below.

Photo by Matthew Ball on Unsplash

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