Whether you’re a fresh graduate or a newly employed individual, chances are you’re still trying to device the right money management plan that best suits your lifestyle.
With all the crazy things going, such as finding the right place to live, completing your travel goals, to even catching up to the latest social media trend, developing a long-term and effective budget plan may seem to be a bit demanding.
However, before you even take another step towards this transition period, it’s important to equip yourself with the right tips on how to handle your finances first. To give you a quick guide, here are 4 important financial tips every 20-something needs to know. Check them out.
Develop a Budget for Money Management
This must probably be the top overused tip any millennial has heard for the last 20 years. However, despite the repetitions, this tip remains to be true and valid. Without a realistic and apt budget plan, anyone is at risk of spending far beyond their personal limit.
If you don’t have a strict budget plan in mind yet, some analysts recommend that you follow the 50-30-20 budget plan. To give you a quick background, this refers to the kind of financial plan where 50% of your income will go to your necessities (such as rent, utility bills, etc.), 30% goes to your day-to-day lifestyle, and 20% is to be reserved for your savings.
Get Out of Debt
If you’re a fresh grad, chances are you’re still torn as to how you can manage to repay your student debt. Although it’s easy to forget about your loans once you’ve made it into the corporate world, setting it aside will only expose you to higher interests in the future.
As most of you already know, the longer you have your debt, the more interest you’ll eventually need to pay. Although it is important to not let go of your monthly savings, it is still necessary to prioritize knocking out your student debt first over anything else. Think of it this way: once you’ve finally paid off your loans, you can finally save up even higher amounts of cash each month. This is a great key to money management.
Understand How Taxes Works
Yep, you’ve read that right. Stepping into your 20s means you’ll now be facing tax responsibilities as well. With this, it is only important to learn the basics of how the tax system works. In particular, knowing what taxes you are liable for can help you keep track of your monthly responsibilities and create a realistic budget plan that will cover all your needs and expenses.
Although some may view the tax system as a bit complicated, knowing its ins and outs can be quite easy once you’ve decided to put your whole heart into it. Moreover, you can also seek the help of a professional financial advisor to acquire an even wider background concerning the topic.
Find a Secondary Income Source
Although having a job can already give you a safety net, finding a secondary income source could grant you an even better assurance. Of course, this doesn’t mean you should find another similarly demanding and energy-draining job as the main one. Be creative. Think of your other skills. Are you good in math? In writing? In visual arts? Think of a way to earn another set of income from those.
Stepping into your 20s might be a bit confusing, especially with all the transitions and new beginnings that may loom directly ahead. It can be difficult to know how much you can safely spend. However, with the right money management tips, you will gradually find your way down the path towards financial success.