12 Best Pieces of Advice for Building a Strong Financial Base in your 20s

You’re in your twenties and probably worried that your financial burdens will soon be yours to shoulder. We understand those concerns; adulthood can be challenging. Hopefully, with this advice inspired by a discussion in an online community, you can navigate these financial burdens easily.

1. Invest in Yourself

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What better time is there to make all those investments for the future than in your twenties? Your career is your most valuable asset; it is where the money comes from. For now, you should be more interested in investing in acquiring knowledge that would be useful to your career in the future. Invest in skills and networking — these are important as they open doors for higher earning potentials.

2. Take Emergency Funding Seriously

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We’re in a world of uncertainty, and anything might occur out of the blue. Say such a situation is only resolvable with money; what do you have to fall back on? “You should have 3-12 months of expenses in your emergency fund,” says a financial advisor. Emergency funds help you cushion the fall from life’s unpredictable curveballs.

3. Maximize Your 401(k)

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If you’re a working-class citizen, here’s some advice you shouldn’t take for granted. A 401(k) contribution plan helps you set aside a percentage of your salary for personal accounts as an employee. Maximizing the 401(k) feature is one effortless way to prepare for retirement or save up for rainy days.

4. Live Within Your Means

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“If your car is too expensive, sell it,” says a contributor. As young people, the life of glamor may call your name incessantly, and you may always find the desire to indulge. But now is not the time to. Anything that costs an arm and a leg and doesn’t promise a tangible return isn’t what you should be investing in now.

5. Have a Retirement Plan

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Yes, you’re still very young, and there’s still enough time, you might say, but now is the time to make retirement plans. You can start by contributing to your employer’s retirement plans, especially if they offer a matching return. Otherwise, you can look out for other matching options. You have an advantage of time; use it while you can.

6. Develop a Habit of Mindful Spending

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You start by asking yourself, “Can I do without this? How relevant is it for me at this moment?” Before you splurge on those trendy gadgets or items, you must pause and reflect on their necessity. This will help you put a check on your spending habits and conserve some money for your future.

7. Invest Your Way Through Wealth

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Do not be like the proverbial servant who buries his income and expects to become wealthier. Start small, perhaps with a low-cost index fund. What matters is that you’re making attempts into meaningful investments. Compound interest is real, as it can turn those early tiny investments into something substantial.

8. Buy a House Instead

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This is another form of investment. Nobody wants to spend their savings on liability when they could get more money from acquiring an asset. A house is an asset because it appreciates with time, and should you not want it anymore, you can sell it off at a higher value. A car is a liability, costing you steady maintenance and depreciating as time passes.

9. Side Hustle Your Way Up

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Find something extra to do aside from your regular job. With the gig economy and tech skills trend, embracing something else for a better financial future makes sense. A side hustle will help boost your income, fund your passion, make you more prosperous, and speed up your financial goals.

10. Work With Budgets

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Think of your budget as a super-powered personal finance assistant. Making a budget that keeps tabs on your earnings and expenditures is essential. Let others call you a miser or stingy; pay them no heed. This is about understanding where your money goes, not necessarily about self-restraint. It’ll also help with spending appropriately as you earn.

11. Check Your Spending

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Sit down with your bank statements, and sum up the withdrawals you’ve made for the month. You’ll find that those little things you thought didn’t cost so much cost a fortune. Once you’ve agreed with yourself that something needs to be done regarding your spending, you’ll be on your first step to financial freedom.

12. Protect Your Wealth

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What’s the point in acquiring wealth when you cannot protect it? Investing in insurance policies to protect these properties and your life is one way to shield your wealth. Also, seeking the expertise of a professional in the field would help.