Your 20s are a time of independence and growth. However, few people realize that this can also be a time to prepare for your future financially. Investing early can make a huge difference. Top financial experts from different investment companies gave advice on how to become financially literate in your 20s.
1. “Compound Interest is the most powerful force in the universe”- Jude Wilson, Wilson Group Financial
Compound interest is the type of interest you gain when your interest begins making interest. However, this takes time time; the sooner you invest the more effective it will be.
2. Consider all aspects of your financial situation – Josh Brien, Seattle Financial Advisor
The 20s are a time where your finances can be spread over a number of things.
Brien suggests this is the time to learn good spending habits. Investing will not save you from the reality of debt. Focus more on what you can do today to improve your financial situation before making stocks or real estate investments.
3. Money is nothing more than a tool- Eric C. Jansen, AspenCross Wealth Management
Many people see money as a problem solver, rather than a tool to create a lifestyle. However, if you’re smart about spending, saving, and investing, you can live comfortably and still be prepared for the future.
4. Invest Gradually- Alex Whitehouse, Whitehouse Wealth Management
In your 20s, it may seem difficult to find money to invest. Alex Whitehouse suggests starting by putting 1% of your income in investments and increasing it by 1% every year. If you’re getting raises along the way, you may not have a change in lifestyle.
5. “Don’t try to keep up with the Joneses… or the Kardashians”- Jamie Pomeroy, Financialgusto.com
Trying to keep up with your friends’ lifestyles can land you in debt. Realize that they may be spending money they don’t have. Instead of going out every night start a Roth IRA, so you have money to spend in retirement when your friends won’t.
6. “The #1 place you have total control with your investments is in yourself,” Matthew Jackson, Solid Wealth Advisors
Investing in tools to develop your skills is one of the best things you can do. It’s basically a risk-free investment that helps you further your goals.
7. “Setting up an automated savings plan will help condition yourself to save consistently all while paying yourself first without having to decide between delayed gratification and instant gratification,”- Anthony T. Reynolds, Coretegic Capital.
One of the easiest ways to do this is to sign up for a work-sponsored 401(k) plan. The funds can automatically be deducted from your payroll every month. Other automated investments you can set up include automatic investments in a brokerage account and traditional high-yield savings account.
8. “If your company offers a 401(k) with a match, contribute at least as much as they will match,”– Christopher Clepp, Strategic Financial Group in Chicago.
This is basically free money, and if you’re not taking advantage of this then you’re missing out on a big opportunity to make real money.
Your 20s are a great time to focus on financial literacy. The sooner you figure out what works for you financially the more wealth you’ll accumulate, and the better your future will be.