Smart Things to do With Your money in Your 20’s.

Written by: Brianne Addison

I am, by no means, an expert on practical ways in which to spend your money. As a 23-year old, I hardly expect anyone to be surprised by this information. Juggling money in your 20’s is tough. You might be renting your first apartment, maybe you’ve landed a good job … at any rate, you’re receiving consistent paychecks, one way or another. It can be extremely difficult not spending your money freely, after all, you’ll just make it up with next week’s paycheck, but living paycheck to paycheck is not the most viable option for a happy future. Though it is, by no means, a crime to “treat yo-self” once in a while, it is definitely a good idea to take a step back and think about how you are spending your funds.

1.      Make quality purchases. Save up some money and make smart purchases, i.e., purchases you know are going to last you “a lifetime” because they cost you a little extra. For instance, buying a new bed in your 20’s is never a bad idea. Although it may not seem all that important, it is one of those memorable steps towards becoming an independent adult. A few months ago, I bit the bullet and decided to buy a new bed (mattress, frame, coverings, etc.) It was one of the most practical buys of my life, but it was not an impulse buy. I did a TON of research about different beds, frames, prices, and companies before I plugged in my debit card information. I even went to Sleepy’s and tried out some of their mattresses just to get a feel. The salesman definitely thought I was nuts, but when my new bed finally arrived I felt like a real adult—independence by means of new furniture.

 

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2. Don’t impulse-buy. Stopping yourself from impulse buying can be quite a tricky task, especially when your friends call you up to go shopping with them. Who can blame you? Buying things (anything!) is a sort of high in its own right. It gets the endorphins pumping and you skip home feeling happy and satisfied. That satisfaction will quickly wear off, however, when you take a look at your bank account. Oh, well, you may say to yourself, it was only “10 dollars”. 10-dollars, or not, it is still money lost. After a time, those 10-dollar items add up and ten crappy items later, you’ve spent 100-dollars on things you ended up getting rid of anyway. My advice? Take a step back, breathe, and exit the store / close the laptop. Half an hour later, you won’t remember why you wanted to buy XYZ in the first place.

 

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3.     Student loans. Ah, yes, the dreaded student debt. It’s been looming over your shoulders like a lagoon monster, waiting to drag you into murky depths from the minute you graduated. If you’ve actually graduated, consider yourself lucky; at least you’ve something to show for all the debt you’ve accumulated. While paying off those pesky, monthly bills might not be something you want to think about, it’s important to face the facts and realize that student debt has the tendency to prevent young adults from living “adult” lives. i.e., buying a home, renting an apartment, getting married, traveling, having children, the list goes on … It is a good idea to pay off more than your minimum, monthly payment. The sooner you can live debt free, the better.

 

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4.     Create a budget plan. I don’t know about you, but I was not taught how to balance a checkbook. My parents tried, but by the time I became old enough to have a bank account, everything was online already, ergo, I hardly ever look at my checkbook. I’ve found this to be true with most of my millennial friends. Nevertheless, it is still very important to keep track of how much you’re spending and how much you’re earning. Monitor your expenses for a month or two, calculate (on average) how much money you take in per month, and then see where adjustments need to be made. It doesn’t have to be an elaborate plan, just a simple one to make sure you are not overspending.

 

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5.     Create savings goals. I suppose this goes along with creating a budget plan. Creating savings goals is crucial to your existence as an adult. You know that trip to Hawaii you want to take or that beautiful mountain range in Colorado you want to hike? That’s never going to happen if you don’t create savings goals. SAVE YOUR MONEY, as best you can, or at least make a conscious effort to do so. It’s a good idea to create both short-term and long-term goals. For instance, short-term goals = Hawaii vacation in 6 months. Long-term goals = buying a house / renting an apartment in a few years. If you don’t create savings goals, you run the risk of relying on your credit when you need to make important, life purchases. If your credit’s not good – because you never learned to create a budget plan – you won’t be able to rely on it. This can make it nearly impossible to buy a house, a car, or even fix the house you’re already residing in.

 

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6.    Open up an IRA account. Yes, I know this sounds incredibly boring, but I promise it’s a good idea. If you’re in your 20’s, you’re probably thinking “I’m too young to think about retirement”, I know I was, but the fact of the matter is, it’s never too early to start thinking about retirement. IRAs – Individual Retirement Accounts— make it easier to save for retirement and come with significant tax advantages, especially for middle-income American’s (i.e., us struggling millennials). IRAs are kind of like an emergency fund. There are two kinds of IRAs, Traditional and Roth. Traditional IRAs comes with the tax breaks, but Roth allows you to withdraw your savings without having to pay funds. Either way, when you grow older, you won’t necessarily want to break your back for a paycheck anymore. The good news is, if you opened up an IRA earlier on, you won’t have to. At least you’ll have the choice not to work, which is why, the earlier you start an IRA, the better.

 

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6. Get your own data plan. By the time you reach your mid-twenties, you should probably be on your own data plan. Don’t rely on your parents to pay your phone bills, they don’t get, and will never get, just how much data use damage you can do in a month. Invest in an unlimited data plan and go wild, my friends, go wild! Go on Facebook, Snapchat, Instagram, Twitter, without having to connect to wifi. It’s brilliant!

 

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7.   Do something crazy. Contrary to how this may sound, after speaking about savings funds, and budgeting your money, at the end of the day, you’re still in your 20’s, the prime of your life. Do something crazy, if you can afford it without too many repercussions. If taking some money out of your bank account isn’t going to render you homeless, then take that money out, friend! Go on a sporadic adventure for a week or two or several! Buy a kayak, a new (used) car, go to a festival or backpack through Europe. The thing is if you have a steady job, and your finances in order, there’s no reason why you shouldn’t be able to have some fun. You’re only young once, after all. If you can balance that mindset with the logical, money saving side of your brain, you’re in for a great life.

 

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