Things We Wish We Knew About Spending, Saving, and Fund Management in Our 20s

Ajay NagpalFor many young men and women in their 20s, saving a large sum of money feels like an impossibility. Likewise, the idea of planning ahead may also feel like a considerable challenge. However, we all know that financial literacy and financial stability must be sought early and intentionally.

Individuals with financial competence can experience the freedoms and joys of comfort, meaning they can have disposable income and make choices that won’t leave them in peril. It’s important to not only be careful about the way you spend but the way you save. After all, there are many misconceptions about spending, savings, and managing funds.

For anyone who made it out of their 20s, there are likely a dozen things they wish they’d learned a bit sooner, which could have set them up for great success in the future.

  1. Utilizing The Credit Card The Right Way | Unfortunately, younger people tend to use their credit cards for apparel and entertainment purposes, while older people tend to use their credit cards to cover the cost of significant repairs and travel. Using your credit card responsibly is a great way to build our credit score and demonstrate financial responsibility.  
  2. Reporting Rent To The Credit Bureaus | Less than 1 percent of credit files contain rental information, according to NerdWallet. Communicating rental information will boost individual credit scores.
  3. Monitor Your Credit| CreditKarma, CreditSesame, and CreditRepair are just three of several resources used by the public to help them achieve financial freedom. These websites offer tips and free monitoring.
  4. Investing With Very Little| For a long time, it seemed that only wealthy people could invest in stocks and mutual funds. Acorns, Stockpile,  and Stash are three available apps, enabling success at income level. According to Bankrate, just one in three millennials, but that could increase that to the development of more investment tools.
  5. Be Careful About Inquiries | Be careful when applying for credit cards. If you aren’t mindful, you can quickly ruin your credit.  
  6. Store Away Money | Seventy-two percent of Millennials have less than $1,000 saved away, according to GoBankingRates. It’s important to get into the habit of setting apart money with each paycheck.

There a few other things you may consider doing, including being mindful of predatory lending; spending less money when socializing, and watching your debt as it accrues.

If you have any other thoughts about unloading debt and better managing your finances, please share.

Encourage Young People To Find Success Through Savings Goals, Programs

Ajay NagpalSetting up savings goals and enrolling young people in youth literacy programs are just some ways young people can grow up financially aware. Showing children or adolescents how to budget and plan should be compulsory, and it can fundamentally teach young people how to be savvy adults.

Read on to learn what ways young people might curb a desire for instant gratification and avoid impulse buying in the future.

Credit cards:  Without a true understanding of what credit cards are, some young people acquire cards and begin to borrow from lenders early. It’s important that older individuals sit down with young people and discuss the dangers of spending money electronically, especially using a credit card. Credit cards are a great tool but they can give you a helpful boost into drowning debt. The next time our child asks you where money from a credit card comes from, explain that the transaction isn’t magic. Allow your child to ask questions about credit card usage and how to safely borrow using credit cards.

Cash and Coins: Digital spending is on the rise, but children still use physical currency as a tool for counting, learning, and saving. The tangible experience of cash has long been fundamental for education. It’s necessary that young people see that there’s a difference between spending money on something like candy vs. a toy car. The candy is cheaper and offers instant gratification. However, the toy car is more expensive but has ‘wealth’ that maintains for a while.

Grocery List: Allow your child the opportunity to help with the shopping list. If your child gains an early understanding of needs vs. wants, ahead of entering the store, they’ll have a greater sense of responsibility, and see the importance of sticking to an established agenda.

Use Jars, not Piggy Banks:  Jars are so much better for saving because they’re clear; also they can separate money as they collect. Rather than sticking all of one’s money in the same jar, young people can set up three jars for spending, sharing, and savings.  They can give their different money jobs by using different jars. Similarly, they can do the same thing by using different apps.

In addition to the other tips, you may want to incentive savings by encouraging adding to your child’s saving when they save. You can track savings in a public place. If you have any other thoughts about helping young people to save early and often, please share!