Saving while in your 20’s

It’s not easy to save when you’re young, fresh out of college and just starting out in the world. Sometimes the priority is not about savings or making an investment but food, rent, going out with friends and loan payment. But what they failed to note is that you’re in your 20’s saving up should be one of your goals. It might feel like you’re trying to build a three story house using straws but saving up for retirement and for stuff such as investments at your 20’s and 30’s is really the best. But anyone nearing retirement age will tell you that the years slip by and that building a sizable nest egg becomes much more difficult if you don’t start early. Also, you’ll probably acquire other expenses you may not have yet, such as a mortgage and a growing family.

So what would be the best start for you to be able to save money while you’re still young and able?

Make it a habit

Remember the saying that it takes 21 days of practice for something to become a habit until it becomes a permanent fixture in your life? This is the same with savings. By practicing it daily/weekly, it’s important to establish a savings habit while you’re young. Begin saving small, effortless amounts and watch your savings account balance grow.

Develop multiple revenues

Do contractual or part time work on the side.  You may also invest in a business as a silent partner or start looking at the rental properties section of real estate websites and delve into the real estate market. Learn to play the currency markets or trade stocks. Do whatever you can to generate income from multiple sources. A good thing is to have a cheap life insurance policy that pays dividends. Grow these multiple revenue streams to the point that they produce adequate consistent and reliable cash flow to replace your current income.

Live below your means

Do not fall into the traps of yuppies where they overspend more than what they’re earning. Overspending is one of the biggest financial problem for a lot of people, and this can be addressed by creating a budget, living a lifestyle tailored fit to saving money and working toward healthy spending habits.

A need for emergency fund

Making sure that you have an emergency fund will protect you and help you keep your finances on the right path. Even when life hits you with unexpected or big expenses, you’ll have the emergency fund to act as a buffer for unexpected expenses — instead of having to use money saved for other goals, or worse, go into debt. As a rule of thumb you should squirrel away at least 3 months’ worth of living expense but if you can afford to save at least 6 months’ worth it will be better.

Remember the earlier you initiate saving for retirement, the better. When you start early, you have the opportunity to put away less money a month since compound interest is on your side.

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