Freshly entering into your 20s is a very exciting time—one that’s filled with new experiences, opportunities, and responsibilities! It’s when you’ll learn everything about yourself, and the world around you, and there’s truly nothing more thrilling than that.
Your 20s is when you’ll achieve several remarkable milestones such as starting your new career, perhaps even securing a long-term partner and relationship, and most importantly, taking charge of you very own financial future. When the paychecks start rolling in and you’re paying for everything on your own, you’ll finally come to the realisation that whatever money that’s going in and out is yours now, and it’s up to you to manage it well.
After all, you wouldn’t want to be living paycheck to paycheck, do you? Of course, you’d want enough in your bank account so that you’ll be able to secure yourself a bright future, as well as one for your loved ones! Be it buying your dream property, car, or even travelling all around the world, all of it takes excellent financial literacy and management.
So, that’s what we’re here for.
Why is financial literacy important?
Financial literacy is the foundation of long-term financial independence and abundance. It is through learning about your money, how to save, invest, and manage it, that you’ll be able to build your wealth so that you can build the future you’ve always dreamt of.
Financial literacy is what teaches you to spend within your means, and to keep the rest for rainy days, because you’ll never know what may happen. It teaches you how to build your wealth for the future, so that you can provide for yourself, and your loved ones, and to make sure that you live a life of safety, comfort, and contentment.
While many argue that money may not be able to buy happiness—which to a certain degree, is true—but it can buy plenty others which can contribute to happiness.
In your 20s though, it may be a difficult pathway to navigate. You’re finally earning your own money and you wish to splurge from time to time, or maybe you’ve got plenty of responsibilities that you’re carrying on your shoulder which you simply have to account for. We see and understand your struggle, and we’d like to offer you a few ways around it!
How to manage your money effectively?
To each their own, everyone manages money in their own way. Some are more conservative, preferring to keep everything in savings accounts, untouched. Others, are risk-takers, willing to go big or go home with investments, knowing that it’s the key to financial success. Of course, you’ll need to strike a balance between both, because it isn’t just one or the other. (source: capitalone.com)
- Budgeting & saving:
You’ll need to develop a realistic budget for yourself. Create a budget that aligns with your income, expenses, and future financial goals. Remember not to lose your head in the clouds, but keep your feet grounded when you’re doing so! Based on your current income, measure out how you can achieve your financial goals through crafting a budget that caters to both your wants and needs, while leaving enough for savings.
With that, you can then track your expenses. Monitor and categorise your spending regularly so that you can identify which areas you’ve perhaps overspent on, and how you can make the necessary adjustments and save even more. It’s a good way to make sure you’re on track with the rest of your spending too, so that you don’t overrun your credit card bill. - Building & improving credit score:
Do your due diligence and learn the importance of credit and how it’ll impact your financial future. Once you’ve gained an idea, you can start to search through the internet—your best resource yet—to explore the many varying strategies that you can take to establish and maintain a positive credit history.
After you’ve learnt all that you need to do, make sure to stick to the plan. Don’t stray from it and be sure to keep all of your payments in an orderly and timely manner so that your credit score will only improve, and not decline, from that point forth. - Debt repayment:
In any case, repaying your debt should hold main priority in any plan, so that you can rid yourself of such responsibilities and focus on what matters later on with a clean slate.
High-interest debt always comes first, and you can opt to make minimum payment on others. Otherwise, know that you have the choice to explore options to either consolidate or negotiate debt to make the repayment more manageable for you. If you find yourself lost in the process, simply seek consultation from professionals for personalised advice! - Investment:
After all is done, and you’ve got a rainy day fund set aside for emergencies, it’s time to take advantage of investing in your 20s to leverage the power of compounding and long-term growth.
Start by educating yourself on investing as a whole, and learn the various types of investment instruments such as stocks, bonds, mutual funds, or even retirement accounts. Be sure to diversify your portfolio so that your risks are minimised and managed too!
The rest, we’ll leave it to you to discover as you learn more about investing on your journey.
All in all, when you manage your finances properly and well in your 20s, that lays a strong groundwork for financial independence and wealth accumulation in the future. Embrace financial literacy and focus on adopting smart money management practices! Remember though, that the journey to financial independence is a marathon, and not a sprint. Start early, be disciplined, and adjust as you go. You’ll be sure to achieve success that way!
If you’d like to get started as soon as possible but you’re unsure of where to begin, let us help you take your first step towards financial independence and success. Simply reach out to us and we’ll be right there to be your guiding light through this journey!
*Disclaimer: “This article is for informational purposes only. It should not be relied upon as legal or financial advice.
*This advertisement has not been reviewed by the Monetary Authority of Singapore.