5 Goals You Must Save Money For In Your 20s
Your twenties are for making the most of each day. This stage of your life also offers a unique opportunity in terms of personal finance—this is the time when you can set the tone for money management for the rest of your life. You can literally take charge of your own life and finances by managing your own money. Check out this video to find out what you should be saving money for in your twenties.
Go Debt Free
If you're beginning a new life in a new city after finishing a hot-shot degree, chances are you have a healthy debt load. This is most commonly seen in the form of student loans to help pay for your education. The average MBA degree will cost between 6 and 20 lakhs. Even if you do not have student loans, your parents may have given you some money to help you get started in your new life.
As a result, if you can, pay it all off because it will allow you to start over.
Expert Advice:
Make sure you have a financial plan in place to pay off your debts as soon as possible. It is a good idea to include your monthly instalment payments in your essential expenses. Adjust your budget and make these payments a priority until you are debt-free.
Emergency Fund
When we were younger, our parents and families provided this for us. From as insignificant as late-night pickups to as monumental as medical assistance, our parents usually provided it all.
Having a safety net allows you to take risks and test the limits of what is socially acceptable. This is one of the most important financial goals to set for yourself in your twenties. Begin saving for an emergency fund that will serve as a safety net for you.
Set aside a small amount of money each month until you have enough to cover emergencies and unexpected expenses. There is no set amount for how much you should save for emergencies, but as a general rule, you should have enough to cover 6 months of expenses. This will help you get through times when you are between jobs or have an unexpected expense.
You'll be able to take more risks once you have a backup plan in place. For example, if your workplace has a toxic environment, you will be able to quit immediately and begin looking for alternatives. If you miss your flight on your solo trip, you'll be able to book an alternate immediately.
The stage is set for you to defy convention as an independent adult. However, in order to truly let go, you must have a safety net.
Insurance
Whether it's a sudden drop in your health or a theft in your home, the solution is insurance. You can also use this as a safety net.
You never realize how important insurance is until you end up in the hospital unexpectedly and are confronted with a massive bill. If the recent coronavirus pandemic has taught us anything, it is that we should never take anything for granted, particularly our health.
Begin with a good health insurance plan and work your way up to life insurance and other policies.
Down Payment
Your twenties are a time when you don't have a family to worry about, no home loans to pay, and nothing to tie you down.
It is more prudent, however, to begin saving for down payments in your twenties, which can include anything from your apartment to your car, depending on your goals.
You can handle this with a SIP. Saving mindlessly for a large sum can be daunting; instead, invest a small amount each month; it will compound and provide you with a much larger sum. For example, if you invest Rs 10,000 per month at a 10% annual growth rate, you will have nearly Rs 20.5 lakhs in 10 years. This can be a start-up fund to help you prepare for the next phase of your life.
Retirement Plans
It's never too early to start saving for retirement. You should plan ahead of time so that you can create a sustainable financial plan that will allow you to enjoy your retirement to the fullest.
Expert Advice
You can supplement your retirement savings by looking into long-term investments.
