5 pieces of financial advice I wish I knew in my 20s
You've heard this before and we are saying it again – being smart with money in your 20s is more important than you think. This is because the investments you make in your 20s will pay off big time for the rest of your life. Making a personal financial plan isn't easy, but that shouldn't deter you from identifying and following a well laid down investment strategy. Start by curbing frivolous expenses and making a personal budget. Rookie mistakes are inevitable but learn to take them in your stride as your mistakes will only make you wiser.
Here's some financial advice I wish I knew in my 20s:
Start saving early
The easiest way to secure and improve your financial future is by saving early. You might have student loans and other debts to pay off but that doesn't mean you can't set aside a small amount every month for investment purposes. You never know when you'll need money in the event of an accident, which is why you need to start saving as soon as possible.
Don't spend half your income on socialising
Millennials have made it a trend to catch up with their friends at expensive restaurants and bars. While it is alright to spend money on an amazing meal once in a while, don't make it a habit to eat at expensive places twice a week. Money spent on socialising appears to be spiraling out of control in the case of many, and they need to start cutting back to save a huge chunk of their money.
Rent where you can afford
When you are younger and still finding your foothold, live where you can afford. Don't spend huge amounts of your income renting showy places. Save your money to buy a house which you want to live in for the rest of your life. Remember, if you make sacrifices in the short-term to save for what you want in the future, you'll have a more fulfilling life.
You don't have to wait till you are rich to start investing
Many people in their 20s believe that only those who have a lot of money should invest in mutual funds and stocks. However, this notion is misguided. You are not going to get rich overnight, which is why you need to start investing with what you have as the investments you make in the present will be your savings in the years to come.
Make a budget and stick to it
When you have a budget, you can differentiate between your wants and needs. For example, paying rent is a need. But buying that expensive red dress that you might wear on an undecided occasion is a want. Without a budget, you risk undersaving for important purchases and overspending on discretionary items.
Every investment has its highs and lows, but when you're young, you can enjoy the highs and ride out the falls. If you're not very good with money, get professional advice on how you can invest wisely so you get great returns when it's finally your time to retire.