Personal finance in your twenties – where could your money take you?
Good money management and financial discipline and acumen are not often associated with youth. In fact, quite the opposite seems to be the stereotype. Trying economic conditions combined with a desire to enjoy your twenties often leaves a little to be desired in the savings department, and many in this age bracket find themselves struggling with debt by the time they reach 30. Getting on top of this early is key, and it’s never too soon to start being savvy with your money. Here are a few things to consider…
Get your debt under control
While buying a home and saving for retirement isn’t on the top of the list for many in their twenties, the accumulation of debt in this time can cause problems for those goals later in life. Generally speaking, debts you’ve built up in this time will need to be paid off before you start thinking about mortgages and other significant financial steps down the track. Paying down debts includes being clear about your spending, changing any unhealthy spending behaviours, and formulating a debt-repayment plan. For further assistance with getting rid of bad debt, no matter what stage of life you’re at, there are support groups and financial counselling services available to everyone, and it’s also wise to seek professional advice from a financial adviser before making any major decisions.
Keep your super in mind
If you’re able to save a good portion of your income, don’t forget about the options available for making voluntary super contributions. While your employer’s contributions help to build your super balance, extra top ups now can have a positive impact when you reach retirement. Before taking that plunge, however, consider how much of your savings you might like to leave accessible before you reach retirement age – super should therefore only form one part of your investment strategy, not the whole lot.
Explore your investment options
As above, your superannuation can be a handy tool for setting yourself up for financial security down the track. Elsewhere, there is a plethora of other investment options that young people can explore. Once you’ve paid down existing debts, establish some financial goals that take into account the potential earnings you’ll make from investing. The value of compounding interest can leave you far better off than simply leaving money in the bank, where you may in fact suffer marginal losses in real terms. As with any investment, understand fully what it is you’re putting your money into before you make a final call. The old saying holds up – if it looks too good to be true, it probably is! For a professional’s perspective, get in touch with a financial adviser and get their take on an investment you’re looking at.
Overall, there’s no minimum age attached to being smart with your hard-earned money – getting on top of your finances early in life can not only save headaches in the future, you may even set yourself up for a lifestyle that exceeds your expectations. Get in touch with the Wealth creation accountants team at McKinley Plowman today on 08 9301 2200 or visit www.mckinleyplowman.com.au for more information on how we can help you achieve your financial goals.
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