While your 20's are a definitely a time of experimentation, adventure, and often stupidity, there are still some things you need to do before you turn 30 in order to secure your financial future. In your mid to late 20's living paycheck to paycheck and going into the negative each month is no longer an acceptable lifestyle choice. Here are 5 tips you should follow to help yourself become financially independent and avoid getting into debt in your 20's. If you follow these tips, future you will be much happier.
1. Have a $1000 Emergency Buffer
Listen, in this day and age you never know what could go wrong. Sure you've been smooth sailing thus far but that doesn't mean your stroke of luck will last indefinitely. Here is a list of things that could go wrong just to scare you; your car could break down, you could incur huge medical bills, your pet could get sick, you could be forced to move out of your rent controlled apartment, you could lose your smartphone....etc.
2. Put at least 20% of your paycheck into a savings account and pretend it doesn't exist
This is so important. You shouldn't be spending your entire paycheck every single month. You need to begin saving as early as possible, not just for emergencies, but also for your retirement. Put that money away and forget about it. Making a small amount of money is not an excuse not to save. If you don't make enough, you should be spending your down time looking for a new job.
3. Max out Your 401K
If your company offers a 401K package, take full advantage. Put as high a percentage as is offered. Many companies will even match your contribution and that is even more money towards your future financial safety!
4. Find a Supplementary Income Option
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Sometimes a little hustle goes a long way. Maybe you sell handmade jewelry, or you babysit for your neighbors kids from time to time. A few extra hundos a week can really help with the bills, not to mention the savings.
5. Pay off your debt
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Don't let your student loan, car, or credit card debt get out of control. Start by paying off your credit card debt because generally the fees on that are the highest. Than make sure you set up a schedule where you automatically make payments each month. Throwing a few hundred here and a few hundred there every couple of months isn't a workable system and will often leave you feeling frustrated at your lack of progress. Using your credit card for expensive dinners may make you feel like a baller now, but imagine how you'll feel in your 30's while all your friends are buying houses and new cars and you're just trying to make rent and pay off your astronomical debt.