Financial Tips for People in their 20s

Are you living from paycheck to paycheck? Or perhaps you’re wondering how you will pay off your student loan before your 70th birthday.  These are all common problems of people in their 20’s. The following are some suggestions on how you can start making your money work for you and not the other way around. You may find that you need to completely change way you look at your finances.

*Live Lean    

First of all I highly recommend making your dollar stretch as far as possible by living in very simple accommodations. You have the rest of your life to live lavishly.  When we’re in our 20’s most of us spend very little time at home anyways so it just makes sense to cut corners in this area.  In addition to living in sparse accommodations, an easy way to cut back on your living expenses is to get a roommate.

*Lose the Lease

Don’t lease a vehicle. The only plus side to leasing a vehicle is that you may get to drive slightly nicer wheels. In the long run, it’s not worth it. There is no long-term benefit to leasing since you have nothing to show for your money at the end of your lease. You’re far better off purchasing a vehicle, or even using public transportation. Keep in mind that if your friends hang around you because of the kind of car you drive, then they are not true friends.

*Set Long-term Goals

Have the goal of retiring when you are 50. This will get you motivated to start saving for your retirement today with investments such as RRSPs. And don’t spend money like there’s no tomorrow – no matter how much you are earning.

*Take Calculated Risks

Experiment with the stock market.  Investing in stocks may seem risky but it doesn’t have to be – as long as you allocate only small amounts of money for this purpose.  By experimenting with stocks while you are young, you will gain valuable knowledge and expertise. You can then use this knowledge to make yourself a lot of amount of money later on in life, when you actually have sizable amounts of money to invest.

*Ditch the Drinks 

Find other ways to have fun besides going to nightclubs. There is no better way to waste your money than by spending it on drinks and cover charges. If you continually drown your sorrows in alcohol, you will soon be drowning in debt, so ditch the bar scene and take up other interests. Take up no-cost or low-cost hobbies such as playing tennis or cooking. As an added bonus, you will actually have memories of what you did that weekend.

*Explore Educational Options

Don’t assume that going to university is the only way to get a good job. For some careers a degree is obviously a requirement, but keep in mind that there are plenty of good jobs out there where it is not.  A few examples include working in a bank, working as a firefighter or starting your own business. If you have always wanted to be a doctor, that’s great, you should go to University. However, it just doesn’t make a lot of sense to go in debt with a huge student loan if you don’t know what you want to be.  And many people don’t know when they’re in their 20’s. 

If your mind is made up on attaining a post-secondary education, consider a 2-year technical school program. There are a multitude of careers to choose from and you won’t be stuck with a giant student loan debt at the end of it.

*Take a Second Job

Consider taking a second job and putting all of your extra earnings into a savings account. Just make sure you choose a second job that isn’t very demanding.  It should be something menial enough so that it doesn’t interfere with your concentration at your main occupation.

*Move Back Home    

When all else fails, consider living at home with your folks. If you have a decent relationship and you are on the verge of homelessness, this may be a smart short-term solution for you. 

In conclusion, there are many valuable tips for managing your money in your 20’s such as stretching your dollar, investing in stocks and getting a second job.  And remember, it’s never too early to start thinking about retirement. The sooner you start, the less you’ll have to worry about it later on.