I feel like a hypocrite writing this article. The goals listed in this article weren't things I achieved until the end of my 20's. This was after I had come from the opposite side of each goal. I had no savings, a wrecked credit score, tons of debt and other financial issues. It was not until near the end of my 20's did I really put everything together. Some people always tell me I should be glad for my painful lessons, but honestly, I rather would not have gone through what I went through to learn what I know now. I wish I had just listened to some of my friends and taken action on the advice from all the self-development books I read.
In this article I am hoping to save some 20 something year old's decade and get you started on your 30's on a positive financial footing. So here are 5 Financial Goals to achieve in your 20's..
1. Build up your Savings.
If you want to prevent living pay-check-to-pay-check when you are older then start saving. This is something I knew but implemented late. I thought my cushy job would always support me; little did I know that was not the case. Start saving as soon as possible even if you do not have a job. How? Open a Tax-Free-Savings-Account and deposit 10% of all the money you get into it. So, 10% of your NSFAS, pocket money, money your parents give you, money from older siblings, money from odd jobs, whatever it is 10% of it must go into your TFSA. Your future self will thank you for it, especially when you have just gotten a new job and need a deposit for a new apartment. Furthermore, you will have built the savings habit which is the best part... who you become is more important than anything else.
2. Build a Healthy Credit Score
I cannot stress this one enough. A healthy credit score is key to being able to do a lot of things. And I am not just talking about buying a car or a property. You want to start a business and get an office? You need a healthy credit score for that? Cellphone contract? Company Car? Business Loan? Funding? Regulatory Approval? Bridging finance? Supplier finance for your tender? Even some Jobs need one. All of it needs a solid credit score. Things you want to do can literally come to a standstill without a good credit score. Prevention is always better than Cure especially when it comes to this.
So how do you do it? Simple, first when a credit provider or bank offers you credit do not accept it immediately. Instead assess if you can afford it, to do this calculate if the total credit plus interest is equal to 10% of your net income. If it is above this, then walk away or ask to reduce it until it is. I wish I had done this. I got credit that was equal to 100% of my salary (hahaha FNB got me good here). I spent 3 years paying it back. Had I done this I would have always been able to pay the credit immediately after using it.
The second thing I would do is to use small credit agreements such as a short-term cellphone contract and a credit card that has 5% of your net salary. Then pay for these things on time and in full. Use these as payment exercises just to build a credit profile. Your behavior will show that you can handle credit. This will make you sort after by banks and making investing in property easier or starting your business simpler in some situation.
Basically... DO NOT MESS UP YOUR CREDIT, GUARD IT CLOSELY. Many 30 something year old's who have good jobs cannot buy a house because they messed up their credit profile in the 20's, don't be like them.
3. Avoid Consumption Debt
Related to the above is Avoid Consumption Debt. This is debt taken out to buy things that you consume. There are two types of debts in this world, 1 Consumption Debt and 2 Investment Debt. Consumption Debt hurts you because you do not get anything in return for taking the burden of the loan. You basically piss the money away into clothes, food, entertainment etc. Do not borrow money to consume. Rather get a loan to invest, just ensure it is a well assessed investment that will not leave you in the hole as well. The only debt you should have is NSFAS or Student Loans, anything outside of that means you have messed up or are at risk financially. Leave your 20's with none if this debt by not even getting into it.
4. Start Investing and Have an Investment Account.
There is literally no excuse to not have an investment account now. If you are South African, you can open an Easy Equities account and deposit as little as R10. Start this as early as possible. Buying assets is how wealth is built. Your assets form the foundation of your net worth. Educate yourself on how to buy listed assets online, it will change not just your life but your families as well. The sooner you start the better it will be for you in the future.
How to do this? Open an Easy Equities account and start investing today. It is that simple.
Furthermore, invest in yourself by learning a new skill such as a programming language, a new language, or network and attend self-development or business conferences. This will help you meet a diverse set of people which will help you grow internally. One of the best things I did for myself is that a learned two programming languages and that opened up a new world of opportunity for me. Find some things that interest you and get into them.
5. Go to the Gym and make that a habit.
It is useless to have all the money in the world but be unhealthy and out of shape. No matter what people tell you, your health is the most important thing you have. Take care of your body. Join a Virgin Active Red, Just Gym, Gym Company or whatever else you can join.
Being physically healthy and fit is the best investment for the later years of your life.
Plus, you will perform better in your career, business, life, relationships, emotionally etc. by just being healthier.
Final Words
There is plenty more I could have said such as get medical insurance, simplify your banking etc. But I wanted to leave you with 2 principles which are Saving money so you can invest it and then getting healthy so you can enjoy it longer. Exit your 20's with these things achieved and maintained and your 30's will be a joy. As someone who has been on the opposite end of this, I can tell you that life is better when you are prepared.
-Happy Investing
Omega
Remember: Opinions expressed in this article do not and never will constitute financial advice. Every person's financial situation is different, I recommend you speak to a financial adviser about yours
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