There is so much information on the web, in the news, your friends have advice, your parents are constantly telling you to do this and do that so you will have money when you retire. You have just started you life and you think you have all the time in the world to save for your retirement, anyway that’s so far away I have plenty of time to save for when I get old.
Here is what most 20 somethings say.
Why do I need to save my money? I see so many cool things I want to do, places I want to go I want to party, I just turned 21 and the world is mine to conquer! I don’t want to put my money in a 401(k) I don’t even understand what that really is. Why would I put my money there? I made my money and I want to spend it myself I don’t want any body telling me what to do with my money.
If you are a parent like me I know you have probably heard every one of these excuses why your son or daughter doesn’t want to prepare for their future and save their money. I know you have tried to even help your children live within a budget, I know I have. They learn in school from their peers that credit is a good thing and they can have anything they want right now! They don’t have to wait for anything, they haven’t yet learned the life lessons that the bills will come due at the first of every month. They see just the minimum they need to pay they don’t read further and see the high interest rate and the amount of years they will pay the minimum just to pay the debit off.
Some of our children are savers
Then there are some of our children that are savers and they think about things differently they want to save their money for those big-ticket items and for them to retire when they’re in there 30’s . They want to travel and they understand they will have to work hard and save their money for the first part of their life so they can live the life they dream about in there late 30’s and onward into there 50’s and 60’s.
What Should I do with My Money
Now lets talk about what you should be doing if you are in your thirties or getting ready to turn thirty. You aren’t doomed if you have spent your money instead of saving it. You will be a little behind on having a 6 figure income when you retire. For that income in your 50’s and 60’s you have to start saving when you are in your teens. If you have done that, that is awesome! You are well on your way to a wonderful life when you are in your 40’s and older.
This post isn’t to nag you for spending your money I know it looks like it but it isn’t! I promise. This post is for those that need to have a place to start in getting their financial life in order so they can have more when they are older.
It’s a check list to make sure you are ready to take on life in your thirties. If you have a family I am sure you are well on your way to conquering a lot of the goals listed here.
10 Budgeting Habits to Master in Your 20’s
- You should have a budgeting game plan. You should have read a few books on budgeting so you can form a game plan that fits in with your life. Here are a couple of really good books to get you on your way. I was Broke Now I’m Not has an amazing website with lots of things to help you form a budget and keep you on track. They have several great books to read that can help you on your way to financial freedom. I was Broke Now I’m Not , Oxen The Graduate Survival Guide is a great book to start with to learn solid information to help you with budgeting and paying off debit.
- You should be anticipating, preparing, and saving up for big expenditures.
- You should have mastered the art of automating.Sending a chunk of your cash automatically to your savings every month means you’re paying yourself first. Making sure you send a percentage of your pay to your 401(k) pays you in the future.
- You should be paying off and prioritizing your high-interest debt.
- You should be maxing out (or, at the very least, meeting your employer’s match for) your 401k.
- During your 20s, you should be trying to raise your credit score.
- You should have an emergency fund with at the minimum of $1,000 in it. When you have to use the money make sure to put it back as quick as you can.
- You should know how to live within your means, but enjoy life at the same time. You should be able to prioritize what’s worth spending on and save in other areas so you can enjoy your guilty pleasures. You might spend on lattes or Red Bull just make sure you cut costs in other areas in order to balance your spending.
- You should have a retirement fund equal to your annual salary by at least age 35.
- When you are paying off debit learn how to use the debit snowball method.With the debt snowball method, you start by listing your debts from smallest to largest. You make the minimum payment on all debts, putting any extra funds toward the smallest debt until it’s paid in full.Then, you take the minimum payment you were paying on the smallest debt, the minimum payment on the next biggest debt, plus any extra funds, and put that money toward the next biggest debt until it too is paid off.This method of keeping your total monthly minimum payments the same (instead of just coasting with the smaller amount of payments actually due) combined with adding any extra funds toward the current smallest debt means that you will pay off your debt at a faster rate.
There you have it. A game plan to work on if you are in your 20’s or a check list to see how you are doing in your 30’s. I have put together a Budget Binder just for you if you haven’t started using one yet. It has everything you need so you can start getting your financials together and on track. It helps you set goals and set a budget every month.
Have a Great day!