Have you reached the age of 20 or are in early 20s and feel like it’s time to become financially independent? Does the idea of achieving future financial security constantly bother you? Safeguarding your financial future becomes a matter of great concern once you’re on the threshold of adulthood.
The reason is that once you grow older, you’re expected to fulfill a number of responsibilities. One such major responsibility is becoming financially independent. The sooner you commence putting in efforts, the safer your financial future will be. Making the right moves, especially while you’re in your 20s is extremely important.
In fact, there are certain financial steps which can help you achieve financial security at an early age. This article will list the 10 financial steps that you can take in your 20s to make your future secure.
Financial Steps To Take For Future Financial Security While In Your 20s
Let’s learn about the 10 most essential financial steps that you can take while in your 20s for future financial security.
Prepare A Personalised Budget Plan
The best thing you can do in your 20s for future financial security is to create a personalised budget plan. First of all, take into consideration your daily expenditures. This includes travel costs, food bills, and other monthly expenses. Doing so will enable you to keep a track on how your money is spent. Moreover, it will help you cut down on unnecessary costs, thereby making it easier for you to save money.
Also Read : Asset Allocation by Age or Goals
Acquire A Skill That Will Pay Off In The Long Run
Since you have stepped on to the threshold of adulthood, it’s very important that you acquire a marketable skill. The skill could be based on anything you are interested in such as graphic designing, content writing, and so on. Commence by availing online tutorials to build a grasp on the skill, and do an internship if required. Nonetheless, if you are acquiring a marketable skill just for the sake of earning some pocket money, it’d be useless. Hence, you should think of how the skill would help you succeed in your career.
Make Sure You Store All Important Financial Documents
Storing your financial documents is of utmost importance as you never know when you may need them in the future. These consist of PAN Card, Aadhaar Card, birth certificate, Passport, and other identification proofs. All these documents would be required when you go out to seek employment, or when you make an investment.
Consider Making Investments
Since you are in your 20s, making an investment may seem like an impossible task. Plus, there is this widespread notion that a huge amount of money is required for making an investment. Whereas that’s not the case in reality. There are various financial products in the market which don’t require a big investment and yet offer great returns. Nonetheless, you must understand the financial product before parking your funds in it. For example, you can start by investing in mutual funds and similar financial instruments. Making small investments at such an early age will make it easier for you to achieve future financial security.
Commence Saving For Your Retirement Needs
Retirement is one of those phases of life for which you require proper financial planning. Although 20 may seem like way too early for retirement planning, it would definitely be worth the effort. Since you don’t any significant responsibilities to fulfill at this age, saving for retirement wouldn’t be a hard task. Moreover, in the later years, you will be thankful to your own self that you saved for your retirement needs.
Put Aside Money To Create Emergency Fund
Life is not just about good times. Unfavorable circumstances can occur at any point in time. An emergency fund can come handy during times of financial hardships such as dealing with medical bills, and job loss. Additionally, creating an emergency fund at such an early age will ensure that you don’t face difficulty during hard times.
Differentiate Between Good Debt & Bad Debt
Since you are passionate about attaining future financial security, you must understand the actual difference between good debt and bad debt. Although having no debt sounds perfectly sound, there is a lot more to it. As the name suggests, bad debt your finances to decline, i.e. credit card debt. Whereas debt that generates higher returns than what it costs is called good debt and it helps build up finances. For example, educational loans generate higher returns in the long run by helping you secure higher pay upon graduating.
Get Rid Of Your Debts
Getting rid of debts while you are in your 20s is very essential. Be it student loans or credit card debt, you should try to pay it off as fast as possible. Because if you don’t, it could turn into a lifelong financial burden. So, you should use whatever savings you have to get rid of your debts.
Build A Good Credit History And Score
Building a good credit history and score is of utmost importance. Your credit score may be considered while you take a home loan or car loan. Not just that, even employers might consider your credit report while hiring you for a job. So, start working towards building a good credit report in your 20s to quickly achieve future financial security.
Opt For Insurance
There is no surety that life will always be perfect. In fact, there will be times when you would require money urgently to cover up certain expenses. Be it a natural disaster or medical emergency, opting for insurance will always turn out to be useful. Most importantly, taking a life/health insurance is a must.
Having learned about the financial steps that can help you secure your future, it’s equally essential to implement the same. Please drop your valuable ideas in the comment box below and feel free to reach out to us anytime! We’d be more than glad to help you out with your queries and doubts.