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Money Management Philosophies in your 20's

by Alice C. Woodhouse
April 22, 2009
Getting through your 20's with a solid financial footing is an ordeal, especially when you've just gotten out of school or college and realized that real life means real bills and real money problems. You can't just allow money troubles to overwhelm you, not now that you're starting your future and building something for yourself.

Most of the time, it's the money management that gets a little difficult, especially curbing appetites in spending your hard-earned money. Living paycheck to paycheck can have serious consequences, particularly when there's little to none margin for savings. Nothing is better than saving, and saving now! Save with whatever you have, start with any amount. Protect yourself and ensure a comfortable future, and ultimately a great retirement savings to make you comfortable.

Start with a structured savings plan you can stick with. Your first goal should be to save for a cash reserve that you can use for emergencies and time when you're in between jobs. You should have at the very least, 3 months worth of your normal living expenses. Start small, but save frequently. Each money you put away can add up and help you come up with the money that you need. Your cash reserve should include food, rent, bills and household payments, insurance and taxes.

Your second goal is to save for retirement. It's not too early to start on it. Start on a savings plan with IRA or 401K, or you could look into other plans if you're working for a private company. Try to put $1,000 - 2000 each year, building on the amount as time goes by. The earlier you start your retirement fund, the bigger your compound earnings will be! Make your retirement a priority, you'll thank yourself when you get there.

Your third goal is saving to pay off debts. If you've just graduated college, its a common thing to have at least $10,000 in academic loans. Put some money aside just to be able to make the minimum payments. The best way to deal with debt is to pay it of as soon as possible.

The 20's is your launching pad to the best life possible, so make budgeting a habit! Commit to manage your money and dedicate yourself into anti-squandering principles. Wasting money on unnecessary spending or blowing it all on getting new items will have serious repercussions as you go through your life. After you save, budget what's left of your money, track where your paycheck is going month after month. Record your sources of income and earnings in a month, and list all the expenses you incur like groceries, car payments, credit card bills, insurance, and just about anything you usually spend your money on. Looking at it from this perspective will make you realize just how healthy your spending habits are, or the very opposite thereof. If there's a discrepancy where expenses are taking over the income then maybe you should reconsider your budgeting lists, or getting another source of income.

Track every spending you make. Don't leave anything out. It's the only way that you can balance the your income vs. expenses properly. As quirky as it may be, track each spending on a small notebook, write down the date, the item and the price. Keep the receipts to every purchase and stash them in a shoebox.

Every single cent is important to you. Pinch your penny and stretch out your dollar!


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Money Management Philosophies in your 20's
 

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