Your 20s come with a number of first timer things: your first job, first paycheck, first car etc. The money you earn in your 20s gives you a sense of independence and freedom as a young person.
Also, it helps you buy the things you strongly wished to own while growing up.
While it can be alluring to spend all your first paychecks on flashy items, this might not be the best option for your financial future.
Those of you still fresh out of college have an amazing opportunity. You may have few bills to sort out, no family to take care of.
Making smart financial choices early enough can greatly help you.
The actions you take in your 20s can have a significant impact on your future financial success.
Putting a blind eye on financial matters in your early life can seriously limit your choices in future and limit you on achieving your life dreams.
Taking control of your money at a young age even if you feel extremely short of money in an entry-level job will help you achieve your goals in your 30s, 40s, 50s and beyond.
Below are smart things to do with your money as a young person.
Set up an Emergency Fund
One of the harsh financial lessons many people learned during the covid 19 pandemic is that Life can change unexpectedly.
According to a report by the World economic forum, it is estimated that 114 million people lost their jobs over 2020 because of COVID-19 pandemic and the resulting lockdown.
For those who were hit hard by the pandemic, an emergency fund was key to staying afloat.
The main motive of having an emergency fund is to cater for large or small unexpected expenses or financial emergencies that are not part of your routine monthly bills and spending.
The fund can also help you get through a period of job loss.
Without a safety net this could set you back, it can give rise to many debts.
In most cases you never know when things will go wrong, in those stressful situations, you don’t want to be stressed about your money too.
You therefore need a safety net to help you pay for unexpected expenses without having to turn to loans, or other borrowing options that create unnecessary stress.
Financial experts advocate one to set aside six months to one-year worth of living expenses in an emergency fund.
It is also very important to start building your emergency fund as early as now; this way, you’ll be better prepared the next time a major disaster hits you.
Invest in Yourself
Many young People get so scared when they hear the word investing, but the reality is, people invest in so many ways every day.
Investing in yourself is another type of investing that can pay huge dividends. For example, right now you are investing in something important – knowledge.
Investing in your physical, emotions, spiritual, and financial wellbeing’s is one of the best returns on investments you can have in your early life.
Whether it’s investing in developing yourself professionally, learning new skills, or personal development, this will make you become the best version of yourself as a young person.
Daily, spend part of your time reading books or listening to audio books.
Books are an awesome resource to build your knowledge and expertise in any area.
Also, attend seminars and workshops to improve on your skills and knowledge. This will also give you the opportunity to meet with individuals who are like-minded in your industry.
Another way to invest in yourself is to eat right each day.
When you focus on eating organic and healthier foods, you will feel better each day and have more energy to carry out your tasks.
The surest way to achieve a better-quality life, and be successful, productive, and satisfied is to place a priority on investing in both personal and professional growth.
Another good reason why you should spend the time and money investing in yourself is because, no one else cares about your life. You and you alone are in control of your life and career.
Investing in yourself is potentially the most important first step you can make towards improving your future.
If you don’t spend part of your paycheck on learning new skills, creating a better life, and expanding your creativity, then you will end up living a miserable life in future.
Invest your money aggressively
Investing money might seem daunting for many young people. Still and all, it’s as easy as falling off a log.
Also, you can start investing your money no matter how much you have saved.
Often, we think of investing as something we start doing later in life. But you can get started a lot earlier than that.
There are many benefits for young people to getting started with investing during youthful years. Most importantly, it builds valuable habits.
also, it makes you benefit out of compound interest.
Aggressive investment strategies are typically thought to suit young adults with smaller portfolio sizes.
Mostly, financial advisers describe an aggressive investment strategy as a good choice for young investors who have time to navigate through the market storms.
There are many ways to pursue an aggressive investment strategy as a young person.
Below are five strategies that you can utilize as a young person based on your income and knowledge.
Aggressive Growth Funds
Emerging Markets Investing
Aggressive investing typically emphasizes capital appreciation as a primary investment objective, rather than income or safety of principal.
Young people can use these Strategies to achieve higher than average returns.
Usually, an aggressive investor works with longer time horizons and a high level of risk tolerance.
In general, the earlier you start investing your money, the better for you.
Everyone has a unique financial situation and over the years, young adults have spent their money in ways you may not expect. Lifestyle often takes a center stage.
The best way to spend and invest your money depends on your personal preferences along with your current and future financial circumstances.
Remember, not all of us have the same economic circumstances, and the world is a different place than the one our grandparents and parents grew up in.
Start as early as now to put your financial house in order even if you are an underpaid clerk. Your older self will thank you for thinking about this stuff earlier enough in life.
As a young person, it’s very important to have a detailed understanding of your income and expenses, assets and liabilities, responsibilities, and goals when you want to build a sound financial future.