Today’s twenty-somethings have already gone through the wringer; between the 2008 financial crisis, skyrocketing student debt, and countless other ecological and financial problems, it seems as if they may never achieve financial security. Despite all of this doom and gloom, however, many people in their twenties are discovering that financial independence is still very achievable if you play your cards right and avoid foolish mistakes that will haunt you for years at a time.
Here are some tips for achieving financial independence in your twenties, and how to make the most of your newfound prosperity once you’ve gotten ahold of it.
Know what financial independence means
For starters, it’s important to establish what financial independence means in the first place. Achieving financial independence in your twenties doesn’t mean you’ll be retiring before your thirties or living a life of luxury. It simply means that you won’t be dependent upon anybody else for your financial needs, and that you can support yourself entirely and still have some extra spending money left over. Setting realistic, achievable goals is important, as many people delay achieving financial independence because they’re aiming too high and thus fail to make smart, well-grounded decisions that will really help them.
You should become familiar with various financial tools, planners, opportunities and products that can help you. Whether it’s Money Under 30’s list of top cashback cards or a visit to your local financial planner, investing in your financial independence by the end of your twenties means finding excellent tools and advisors which can help you attain this goal. Until these tools and opportunities are familiar to you, it will be a struggle to become prosperous enough to enjoy financial independence.
You should also know that financial independence demands excellent habits; you’ll need to consistently make the right choice rather than just occasionally doing something because it seems wise. Consistency is the key to success, as an excellent month of saving can be totally wiped out if you splurge the next month and eradicate what progress you made earlier. Familiarize yourself with excellent financial habits that will help you retire early, and you can expect to enjoy financial independence sooner rather than later.
You also shouldn’t discount frugality, as huge spending sprees can and will impact your long-term savings. That being said, don’t be afraid to treat yourself or force yourself into poverty conditions out of a desire to become a roaring success before you’ve finished your youth. Many wealthy people like to argue that young folks should spend less extravagantly, and while its true you must be responsible with your cash, these claims often go way too far in asserting how much young people “waste their money on nonsense.”
Be careful with commitments
The next step to achieving financial independence in your twenties is knowing not to overextend yourself. Some commitments will actually help you achieve financial security, but others will weigh you down and seriously mitigate your future options. Buying a house at a young age, for instance, can be a huge investment that ends up tying you down to a certain geographical area for a certain extent of time. Similarly, taking on a loan that enables you to pursue a short-term opportunity could come at your long-term expense, as steep interest payments will quickly pile up.
More than anything else, being risk-adverse and knowing how to save your money will help you achieve financial independence in your twenties. You can’t expect to become an overnight millionaire – that’s mostly for the movies. With smart planning and savvy saving, however, you’ll be far better off than most of your peers by the end of your twenties.