THUNDER BAY – LIVING – Most of us in our 20s are dealing with large amounts of student debt and credit card debt and live by every pay cheque to pay that down. Meanwhile, we dream about the day when we can achieve our financial goals.
When you’re in your 20s you may think doing some financial planning is pointless but the truth is there are some basic strategies you can start using, regardless of how much debt you have or income you earn.
Create a Budget
Budgeting is extremely important, even if you’re not making that much money yet since it allows you to know how much is coming in and going out every month. Budgeting early and often will help ensure you live within your means, and help you save the little bit extra for that first house, or whatever your heart desires.
Save first, Spend second
Most people don’t save because they make it harder than it needs to be. After you review your budget, determine how much extra income you have from what’s coming in versus going out. Once you’ve determined an amount, pay yourself first. Setup an account that takes that amount out of your bank account and into a separate savings account for you. It’s good to have this setup to come out the day after you get paid, that way you don’t have a chance to spend it.
Even if the amount you are starting with is only $25 a pay cheque, it’s better to start with something than it is to not start at all.
Think about your Credit Score
Your credit score will affect you at some point in your life. It affects your ability to buy a house, a car, or even get a credit card. Not only does it affect your ability to get these things, but it can affect the rate a lender will give that money to you for. Make sure that if you’re taking out debt, you are paying it back on time while paying off the debt with the highest interest rate first.
Grow your Earnings Potential
Income, with saving, is the biggest wealth creation over time. After all, if you don’t make money, you can’t save money. Focus on things that will help you get ahead in your career, or that could help you make money in the future. Think outside the box if you need to, but focus on the things that will increase your earnings potential every year.
The Bottom Line
By setting some time to focus on these things, you are taking little steps that will pay off in the future. Plan it, stick with it, and you’ll see with time what it does for you.
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Anthony M. Talarico
Financial Security & Investment Representative
W: (807)343-4788 ext. 4248