Your 20s and 30s are some of the most formative years of your life. You’re starting your career, building relationships, and discovering who you are as a person. It’s also a critical time for establishing good financial habits that will help you achieve your long-term goals. With that in mind, here are ten smart money moves you can make in your 20s and 30s.
Start saving early
Saving early is the key to building long-term wealth. The earlier you start, the more time your money has to grow. Consider putting aside at least 10-15% of your income into a savings account or investment account. Even small contributions can add up over time.
Create a budget
Creating a budget is a fundamental step in achieving financial stability. It helps you understand where your money is going and identify areas where you can cut back. Consider using a budgeting app or spreadsheet to track your spending.
Build an emergency fund
An emergency fund is essential to help you weather unexpected financial storms. Aim to save at least 3-6 months of living expenses in a separate savings account. This will give you peace of mind knowing that you have a safety net in case of a job loss or medical emergency.
Pay off high-interest debt
Paying off high-interest debt, such as credit card debt, should be a top priority. The interest rates on credit cards can be very high, and the longer you carry a balance, the more you’ll pay in interest. Focus on paying off your high-interest debt first, then work on paying down other debts.
Start investing
Investing is a great way to build wealth over the long term. Consider investing in a low-cost index fund or exchange-traded fund (ETF) that tracks the stock market. You can also invest in individual stocks or bonds, but be sure to do your research and diversify your portfolio.
Maximize your employer’s retirement plan
If your employer offers a retirement plan, take advantage of it. Maximize your contributions to the plan to take advantage of any employer matching contributions. Even small contributions can add up over time, thanks to the power of compound interest.
Build your credit score
Your credit score is a critical factor in getting approved for loans and credit cards. To build your credit score, pay your bills on time, keep your credit card balances low, and avoid opening too many new accounts at once.
Start a side hustle
A side hustle is a great way to earn extra income and build new skills. Consider freelancing, starting a small business, or monetizing a hobby. The extra income can help you pay off debt, save for the future, or invest in your career.
Live below your means
Living below your means is key to achieving financial stability. Don’t fall into the trap of overspending on things you don’t need. Consider buying used items, cooking at home, and shopping for deals to save money.
Get professional financial advice
Finally, consider getting professional financial advice from a financial planner or advisor. They can help you develop a personalized financial plan that aligns with your goals and risk tolerance. They can also provide guidance on investing, saving, and other financial matters.