5 Financial Habits To Start In Your 20s To Build Wealth In Your 30s And Beyond
Creating good financial habits in your 20s is super important if you want to become financially independent and start building wealth as early in life as possible. In this post, we give you the 5 most valuable habits every BossGirl needs.
A lot is going on around you when you’re in your 20s. There’s always one more party to go to, one more outfit to get your hands on, and one more unforgettable trip with the girls you wouldn’t miss for the world. So losing grip of your finances is easy.
But you’re a BossGirl and you have bigger plans for your future, so you should change the way you see money and start building healthy financial habits as soon as you can. Sticking to these habits won’t always be easy, and this process will seriously test your willpower, as you might have to say “no” to some of the things you really want to do right now. But this doesn’t mean that you’ll need to give up the fun parts of being young, not at all, you’ll just need to be more mindful about your decisions than your peers who aren’t trying to build an empire.
Everything will be more than worth it in the end, trust me. If you create healthy financial habits during your 20s and use your 30s to perfect them, you’ll be able to spend the rest of your life building wealth and no one will be able to stop you.
Oh, and if you haven’t read our post on how to achieve financial freedom yet, go check it out after you finish reading this one! It’s full of valuable tips that can come in handy in this journey too.
Now, are you ready to discover the game-changing habits that will completely change your relationship with money? Let’s get into it.
- Pay off your debts first
Sometimes we owe money for reasons we can’t really avoid (health, emergencies, education,…), but make sure you don’t fall into a hole of debt for things that you don’t need. So if you’re paying back something like your student loans, make them a priority to avoid building a mountain or never-ending interest.
But otherwise, always, always try to avoid debt. I know that putting everything on a credit card is tempting, and it’s easy to get carried away, but I don’t want you to spend your 30s paying off the impulse purchases from your 20s.
- Look after your credit score
One of the reasons why your future self will thank you for staying out of debt is that you’ll have a pretty good credit score as a result.
Your credit score tells banks and lenders how safe it is to give you or your business money. If you keep an eye on it and stay away from ugly money habits like getting into credit card debt and having unpaid loans, they’ll be able to see that investing in you is worth it.
Isn’t this exciting? If you keep your credit score high, you’ll be able to get a mortgage with a low interest rate for your dream property, or get a loan to scale your business to new heights you never could have imagined before. So, even if you have to give up a few things here and there to keep that score up, think about your ultimate goal and these sacrifices will look small.
- Stick to a realistic budget
Creating a budget and sticking to it is a must for every Boss Girl.
First, you need to know how much money gets in and out of your bank account each month, so you need to look at things like your income, any debts you might need to pay off, and your business and personal expenses.
This is a learning curve and creating your perfect budget will need adjustments as your life changes – budgeting a $ 1,000 salary is not the same as a $ 5,000+. If you budget correctly, you’ll have money for everything and won’t have any issues saving and investing a part of it, but if you’re unrealistic about the money you have, you might have to give up certain lifestyle expenses to make space for more important ones, such as loans or savings.
And here you have a pro-tip: always add in your budget your “me-time”. Anything you do for fun should have its place in your budget so that you can enjoy the results of your hard work without overspending the money you have earned with your effort.
- Make saving a habit
How much you can save each month really depends on your needs, your salary and your lifestyle, but most finance gurus recommend to save at least 20% of your monthly income.
Does it sound like too much to set apart each month? Think about it, if you start making $1,000 with your first salary and you save 20% of that each month, the moment you turn 30 you’ll have at least $ 24,000 in your bank account – and this actually is the worst-case scenario, because in those 10 years your business will have probably skyrocketed and your income will be much, much higher.
Now 20% doesn’t sound that bad, does it? By just making this a habit, in no time you’ll have in your pocket the down payment for a home or more than enough cash to get your dream car.
We know that doing this in your 20s might make you feel left out if you’re not in a social circle where everyone is sticking to a budget, but it’s definitely an effort worth making – if you want to discover our tips on this topic, read our post on why you shouldn’t be ashamed of saving money.
- Dip your toes into investing
We’ve talked about investing before in this post about side hustles, and it truly is one of the smartest money moves you can ever make – as long as you do it carefully!
Investing a percentage of your income can help you make the most of your income in the short and middle term, and build wealth and create your retirement fund in the long-term. And yes, I know it sounds weird, but the sooner you start thinking about your retirement, the better.
So you should find the investment that works best for what you want and for the risk you’re willing to take. If you want a quick win and can afford to invest with a very high risk, you can learn about how the stock market works and try day-trading. But if you want your money to work for you in the long term, you should invest a part of your income every single month towards dividends or mutual funds.
Probably you thought that to build good financial habits you would have to go out of your way. And you’ll have to make changes in your life if you want to see your bank account grow, but these habits are really easy to accomplish and they won’t take any of the fun of being in your 20s away.
Do you want one more piece of advice? You should start slow and with the easiest habits to avoid burnout. First, you can create your budget and build a savings account while you learn about investments and credit score management. And after you’ve created a solid base, you can go on to invest and find more advanced ways to build your wealth.
This will take time and you’ll need to learn a lot along this journey about what really works for you, so the most important thing is you don’t ever quit.