Finance is often the furthest thing from a 20-year-old’s mind. Instead of thinking about retirement, saving for unexpected expenses, and trying to accumulate assets, most of us spend our 20s thinking about where the next house party will be. . While this is acceptable to some degree, those who think about finances in their twenties often do much better later in life. They benefit from a safer financial cushion and they tend to know a lot more about investing and what making their money work for them, rather than the other way around. Here are some financial tips I wish I had known in my twenties.
Start saving as soon as possible
Putting a few dollars aside each week may seem unnecessary, but saving money is important and small contributions to your savings over a long period of time equals a secure financial future. Start by opening a savings account and try to stick to a schedule of depositing a set amount from your paycheck each week. Committing to building that nest egg will help you learn more about the power of compound interest and, let’s face it, we should all commit to learning more about our financial system and how it works.
Ask for help
When it comes to finances, most of us are independent. We like to be in control and will do anything to avoid having to ask for help. We are embarrassed to admit that we don’t know what we are doing or that we need advice. The truth is, there’s no shame in admitting that you need guidance and ask for help with your money account. In fact, it’s a good idea to seek advice from professionals who know what they’re doing. The sooner you reach out on your journey to financial freedom, the better off you will be.
Invest in real estate
Looking for a place to invest your earnings? Think real estate. The best thing is that you don’t need to be a professional to start and you don’t need huge capital behind you either. One option is to buy shares in income-producing rental properties. With the allowable deduction for business income on rental properties, you can save 20% on your taxable income by investing in REITs. Another option is to flip a property or, if you have the capital, you can buy and hold. Real estate is one of the few investments that will continue to grow in value over time, making it ideal for young investors.
Learn how to use a credit card
It’s easy to get carried away when you have a credit card in your back pocket. Swipe it for gas, pat it for a new coat, or treat your friend to movie night. You might think that a credit card is fine for all of the above, but the truth is that credit cards should only be used for expensive purchases like thefts and home repairs. The reason is high interest rates. Other credit card tips include using less than 30% of your credit limit and always pay your bill on time.