People in their 20s often want to spend their time enjoying their youth and creating memories that they’ll carry for the rest of their lives. Who can blame them? Your 20s are the time when you start earning a reasonable income without the major responsibilities that adulthood brings. While there is nothing wrong with this choice, you may have to cope with the financial repercussions of these actions sooner than you expected.
If you would like to be wiser with your money, no need to worry. We have listed some top financial goals to consider during your 20s that can help you on the road to financial freedom.
Top Financial Goals For Your 20s
1. Pay Off All Debts
If you have accumulated any debts, such as credit card debts, student loans, car loans, personal loans or any other type of debt, you should work hard to pay them off. It would be best if you remembered that living under the burden of debt can lead to severe problems in the future.
2. Save at Least 3 Months of Your Annual Living Expenses
It would be a great accomplishment if you could save at least 3 months of your living expenses in a bank account. For example, if your living expenses are $2,500 per month, aim to have at leave $7,500 in savings.
The amount is relatively small, but it will be enough to cover you in most situations should you suddenly lose your job or be out of work for another reason, such as health problems or a change in your personal circumstances.
3. Build Wealth
Investing is one of the most effective ways to help you create wealth. You can invest in a wide variety of options including Australian shares, international shares, bonds, infrastructure and property. The investment choices you make will affect your lifestyle choices in the future.
Investing can be risky. If you put all your eggs in one basket, you can lose your money if the investment fails. Investing should be a way to help you build a nest egg for the future. Thus, you should make sure you have a variety of investments.
4. Put Something Away for Retirement
If you want to retire early, it only makes sense that you should also start preparing for your retirement early. There are many different options such as making before-tax or after-tax contributions into your superannuation, alternatively, you can create a personal investment account with the purpose of not accessing it until you retire.
5. Start Saving Your House Deposit
Many young people are keen to get on the property ladder before they are priced out of the market. If you want to purchase your home rather than rent, it is important to start saving early so that you can firstly accrue the necessary deposit and secondly, show your lender that you are able to save (which will help you to secure a home loan).
The typical rule of thumb for purchasing a home is to save 20% of the purchase price, however, depending on the property you purchase and its value, you may be eligible for benefits such as the First Homeowner Grant, First Home Buyer Assistance Scheme, First Home Guarantee or one-off transfer duty concessions which can bring down your required deposit by a considerable amount.
6. Invest in Personal Insurance
Personal Insurance encompasses several types of insurance including Life Cover, Total and Permanent Disability, Trauma Cover, and Income Protection.
One of the biggest reasons to get insurance early – even if you don’t have a family of your own yet – is that the premiums are typically much cheaper when you’re younger. In fact, the younger you are when you buy life insurance, the lower your premiums will be.
This is because life insurance companies know statistically that younger people are likely to live longer than older people. So, they charge younger people lower premiums to reflect this fact.
The Early Bird Catches the Worm! Start Your Financial Plan Today with CCFPG
While it is not always possible to achieve these top financial goals in your 20s, it is important to realize that the financial choices you make during your first few years of working will be significant for your future financial well-being. Since you can only get wiser as you grow older, make each experience count to achieve financial freedom in the future.
If you want to learn more valuable financial planning strategies, look no further than our expert team here at Central Coast Financial Planning Group. We are here to work closely with you, selecting suitable strategies to give you peace of mind so that you can have the ability to finance the lifestyle you desire. Call us or book online to secure your complimentary first meeting with our advice team today!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.