How to be financially savvy and have fun in your 20s
For many young adults in their early 20s, balancing finances and social life can be a juggling act. With student loan repayments, rent, insurance and more, it’s no surprise that many young people in their twenties put off saving and investing because they don’t know where to start or where to start. do not have time for this.
Finding that balance doesn’t have to be difficult, nor does it have to take a long time. You just have to be smart about it. A few steps now can help you ensure that you can be financially secure, prepared for unforeseen expenses, and still have fun along the way.
The first step that many experts recommend: Take inventory.
“Before you even decide what you want to do or where you want to be in the future, have a really good idea of what your finances look like today,” said Shweta Lawande, Certified Financial Planner at Francis Financial.
It can be as simple as writing down what you earn, what your essential expenses are (rent, utilities, car payment, etc.), how much you are currently spending on fun things like shopping and going out, and how much. You save .
A simple way to look at it is the 50-30-20 rule: spend 50% of your income on needs, 30% on wants (fun) and save 20%. Consider how your math compares to this rule and see if you need to make some adjustments.
Lawande recommends organizing what you have in your checking and savings accounts (or any investment account) first.
If you are not saving anything yet, you should start immediately. You never know when unforeseen expenses will arise. And, while you can’t afford to save a lot right now, a little each month will go a long way over time. And, if you automate it – have $ 50, $ 100, or $ 200 withdrawn from your account each month and put it in some savings account – you’ll never miss it.
“The first thing I tell everyone is automate, automate, automate,” Lawande said.
And it’s not just savings. Lawande suggests automating as many things as possible, including minimum credit card payments and money in a retirement savings account. This will help you really see how much you have left at the end of each month to have fun – and it will help you avoid spending too much on having fun and then stuck at a dead end later.
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Once you’ve taken these basic steps down, decide what your financial goals are.
“Having fun is definitely one reason we’re all here to make money,” said Lauryn Williams, owner and founder of Worth Winning, a financial planning company that helps young professionals organize their finances. “But what we ultimately try to achieve with the dollars we earn is an important thing to determine.”
Williams suggests deciding on the top three things you want to accomplish with your money. Whether it’s paying off student loans or traveling to Europe, decide on the most important places you want your money to go, then design a budget for them.
Lawande suggests making a step-by-step plan for how your current financial situation can lead to your future financial goal. Small steps are much easier to take than trying to tackle the whole goal all at once. So if you want to take that trip to Europe, start saving some money for it every month.
Once you’ve figured out how much you’re setting aside to save, you need to figure out where you want to put it. You can put it in a savings account to get started, just to get it going. Then you can find a few places where you can maximize the return on that money – get that money by making more money for yourself, while you have fun or run around Europe!
Maddy Valente, a 24-year-old account manager at public relations firm All Points, has numerous long-term investment accounts. She regularly places money in a high yield savings account, Roth IRA account, brokerage account, and real estate investments. She keeps track of her monthly bills and savings, but also puts money aside each week to spend time with her friends.
Maddy Valente, Account Manager at All Points, a public relations firm.
Source: Nicole Odziewa
“I actually use Mint, and it keeps track of all of my accounts, and it keeps track of my investments,” Valente said. “On the other hand, I always try to save one day a week, at a minimum, to go out with my friends. Dinner, going out or whatever, I leave some room in my budget for that day.”
Valentina Zarins, an international student at Sarah Lawrence College, diversifies her income to balance saving money and having a social life while in school. She earns money through a variety of side gigs such as modeling, being an extra on movie and television shows, and participating in focus groups. With a diversified income, Zarins said that she is able to make as much money, or as little money, as she needs at any given time.
“By trying to get more jobs, I have reduced the time I have to spend in each of them,” Zarins said. “I find it crazy how in America there are a lot of ways to make money.”
Jorge Zepeda, a student at California State University, Fullerton, is only 21 years old but his priority is to invest his money. He just started investing in the stock market two years ago, but has seen his initial investment of $ 2,000 grow to $ 60,000 by gradually investing more money over time and looking for growth opportunities.
When he started investing, Zepeda mostly invested his money in index funds, which are stocks and bonds that reflect market performance and do not require investors to actively manage money. Over time however, Zepeda began to actively manage her investments and invest money in high growth stocks like Tesla where her return was 7 times greater than her investment.
Jorge Zepeda, student at California State University, Fullerton.
Source: Ester Zepeda
Zepeda admits that investing is more of a time commitment than other strategies like simply automating your savings.
“It’s definitely a lifestyle, but it’s worth it,” Zepeda said. “You see people going to different places, going out to drink or ordering bottle services, but what are they going to have to show for that in 10 years? “
He sets aside money for fun things like eating out, which he enjoys.
Williams said people in their 20s need to remember that having fun while being financially savvy takes sacrifice. If you live in cheaper accommodation or drive a cheap car, you can have more money to save and invest while having fun.
“We have to decide: what are the most important things? Williams said. “If you have a car or if you live further out of town than you would like, then you will have more money to go into town on the weekends and have fun with your friends.”
CNBC “College Voices″ Is a series written by CNBC interns from universities across the country about getting their college education, managing their own money, and launching their careers in these extraordinary times. Mikaela Cohen is a graduate student at the University of Georgia, pursuing her Masters in Journalism. His mentor is Patricia martell. The series is edited by Cindy Perman.