Monday, October 30, 2017
5 Money Tips for People Under 30
Being 33 years old I remember quite vividly what it was like during my 20’s, well most things. One thing that troubled me was the lack of solid financial advice I received. This came at a time when I sorely needed that kind of help. I was making stupid mistake after stupid mistake for the good part of a decade. Once I was 26 I had had enough. I was sick of being broke, I was sick of being in debt and I was sick of bullshit jobs that didn’t pay me enough. I was also sick, physically, which didn’t help matters. No one told me the route to go when it came to getting out of my money mess. Sadly, I didn’t ask for help either, I was too stubborn. I did, however, change the way I went about handling my money. In today’s post, I will give my top 5 money tips for anyone under the age of 30. These are 5 ways to get ahead of the curve before life starts to pull at you from every direction.
1) Work as much as you can
I know this doesn’t sound fun, but you have to be working your butt off in your twenties. Don’t believe me? I had 2 phases in my 20’s:
Age 20-25
-Partying like a rockstar, with the budget of a bum
-Racking up debt and living paycheque to paycheque
-Very little job security, always in fear of not being able to work
-Constantly robbing Peter to pay Paul and never getting ahead
-No Savings, lots of debt, never more than $1000 to my name
Age 26-31
-Began working as much as possible, had 3 jobs for 3 years at one point
-Started paying down debt, finishing off the student loan by age 31
-Rarely went out to party, chose my spots
-Repaired my terrible credit, was able to regain borrower status
-Became debt-free, ventured into a new business
It all came from working as much as possible. I needed a lot of money coming in to get out of the massive hole I put myself in. I also needed to spend less because I was leaking like a faucet. The good thing about working more is that you usually spend less because all your time is spent working and not having fun. I have been working 50+ hours a week for the past 8 years. That is what it took to save up some money and get ahead. Now I have had some fun, not as much as I would like, but I have focused on working as much as I can. I just wish I started with mentality when I was 20 instead of 26, I would be far better off. The clients who come to me wishing to save and invest at age 20 are straight-up rockstars. Be that guy or girl!
Having the Right Money Mentality – Budget Boss
2) Save 20-25% of everything you make
I talk about building your net worth all the time. Just to recap, Net Worth = Assets – Liabilities. That means what you have minus what you owe. In your 20’s you have to contribute 20-25% to building your net worth. That means paying down debt and saving money. You are at an age where you have more energy than you will ever have, so use it. You want to be in a solid spot by the age of 30 because that is when life starts to drag you down. Marriage, kids, older parents, work, and everything else will be bleeding your wallet. Take your 20’s to be “selfish” in your goals so you can be Mr. or Miss Helpful later on. While you are paying down the debt, save a little too. I recommend the 15% debt and 10% savings ratio. The reason for this is more of a psychological effect. When you are debt-free it is very nice to have something to show for it other than a few grey hairs. A juicy Emergency Fund is always nice to start your journey with.
3) Live basic, minimalism
You might ask: How can I save 20-25% when I am this young, I can barely get by? Add working more to spending less and you will have it. Focus on keeping your fixed expenses as low as possible. For some, that means living at home, while others have roommates. The cool thing about this is that everyone else your age is facing the same problems so no one can judge you. Plus who cares if they do anyway. While you are focusing on lowering those fixed expenses, make sure you aren’t spending too much on variable expenses either. Get stuff on sale (that you need of course), reduce dining out, spend free time doing free stuff, avoid alcohol and drugs, quit smoking, cure your shopaholic tendencies, and just be straight-up ghetto. These virtues will help you later in life when the problems become more complex and more expensive.
25 Reasons Your Might be a Minimalist – Be More With Less
4) Build good money habits
Here he goes again…….Use a BUDGET! Using a budget helps track your spending and organizes your fixed expenses. Have a bill day every month, two weeks or week to organize your stuff. Mine is the 28th of every month, know yours. Save in advance for large purchases. Maintain positive cash flow every month. Pay off credit cards after you use them. Make sure know what your “wants” are versus your “needs.” Take care of things before they become too costly, like car repairs. Pay bills early and never miss payments. Practice frugality, but don’t be cheap, there is a difference. Work on minimalism, as much as possible. Take these steps in your 20’s so the foundation will be rock solid come your 30’s. The right money mentality will take you very far in life.
5) Learn as much as possible
You are young fresh, savvy, and eager; use that enthusiasm to learn as much as possible. Take extra courses at the community college. Upgrade your skills and learn new things. Step outside your comfort realm. Dive into business knowledge, you never know when you might have an opportunity to venture off on your own. Begin to understand saving, investing, mortgages, insurance, retirement planning, and many other financial topics that will help you later in life. Talk to older people who are successful and absorb as much as possible from them. People who are successful love to share their stories on how they got there, so take it all in. Network and build friendships in the fields you are in, they will pay off later. This is the time to shine and show people you know that you are young, ambitious, and ready to roll.
I look at your 20’s like a blank canvas, where any picture can be painted. It’s time to invest in you and find out where you stand in this world. You are young, agile, and tough, so roll with the punches. Understand yourself and understand your relationship with money. We are all different so take this time to find out who you are. Also, take this time to build the foundation of your financial independence. If you don’t, come 30 you will have wished you had.
Thanks for reading the first post of Millennials Week here at Budget Boss. Don’t forget to tune in tomorrow when we discuss young people and debt. Shoot me a message at joe@budgetboss.ca if you want to start your own savings plan. Have a great day!
“Millennials are often portrayed as apathetic, disinterested, tuned out, and selfish. None of those adjectives describe the Millennials I’ve been privileged to meet and work with.” – Chelsea Clinton
Email – joe@budgetboss.ca
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