Financial Matters

Fighting for Financial Freedom in your 20’s

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Being in your 20s bring lots of surprises, some unwanted and a few unexpected; it is a journey nonetheless. If you went to college, you probably started your first professional job in your early 20’s. This means two things: if you took out student loans, debt now has a new meaning. Secondly, your entry-level position is met with an entry-level salary. According to Glassdoor, the average entry-level salary in the U.S. is $28,000. Of course, salary levels vary depending on the location, industry and company. Regardless it can be a tough transition into adulting. Finishing college with the burden of student loans, newfound bills such as rent and a new job that is only offering $33K can be overwhelming at the least. These are everyday circumstances for college graduates of this generation. Achieving financial freedom is a fight of our 20s. Not only are we beginning our careers, but our financial journey as well.

We ideally develop financial literacy at an early age. However, not everyone is granted the opportunity to learn financial fundamentals from their parents. Our upbringing does indeed sculpts us–whether it be habits you pick up from your parents, or lessons you watched your siblings learn the hard way. These lessons and habits can follow us into adulthood. Some are good habits, but others can be self-destructing. I was fortunate enough to have a father who works in the financial industry, and a mother who is a business owner and entrepreneur. They instilled a great financial foundation for me, but like many stubborn children, I still had to learn a few things the hard way.

Setting financial goals is the first step in the right direction. Prioritize your needs and use that to fuel the SMART goals you set. SMART goals are specific, measurable, achievable, relevant, and time-bound. When your goals are detailed and thorough, it is easier to hold yourself accountable. Once you have solidified these goals, create a monthly budget based on the priorities you identified. As someone who loves to travel, I would rather miss a few happy hours and pass on the new shoes in order to afford my next trip. Prioritizing your wants, helps you to do the things you enjoy most while still living within your means.

Living within your means is imperative to achieving financial freedom.  Credit cards can be a great tool, but if not used properly they could also be detrimental. “If you can’t pay for it in cash, you can’t afford it,” A phrase my mother told me upon receiving my first credit card approval. This is not to say you should not put charges on your credit card, after all that is what it is for; but be strategic. Use your credit card as a means to build your credit opposed to a means of living. For an example, charging your card and not knowing when you will be able to pay it off is considered living off your card. This is not ideal, because unless you pay off your balance at the end of the month, you risk paying interest on your charges. Credit card balances can accumulate quickly if not monitored properly.

Tracking your spending can help you identify where you are overspending as well as opportunities to save. As banks are now appealing to consumer’s love for technology, most banks offer an online banking app. This is a great tool to monitor your spending habits. Ubers and dinning tend to be my weaknesses when it comes to maintaining a monthly budget. Every month I search Uber within my bank statement, and it allows me to see how much I have spent on transportation for the month. I know sometimes it seems easier not to look, but if you don’t check your bank statements you can’t see where you need to make better choices, or even recognize where you have been successfully cutting back. There are also budgeting apps such as Mint and Pocket Guard. These apps have advance budgeting capabilities and can connect to your bank account for tracking purposes. You can monitor spend by category and even receive alerts when you exceed your budget. There is also a feature that can identify opportunities for you to save.

As we continue to conquer our 20s we may shift tax brackets in process. Although more money may come, it is important to remember the principles that have carried us this far. If you don’t know how to handle your finances, making more money will only create bigger problems. As millennials, we always encourage one another to, “live your best life.” Although designer clothes, and expensive habits can make you feel like you are living your best life, investing in your future and eliminating the stress of debt brings peace money can’t buy.

Investing in your future is the next step in claiming financial freedom. Investing in stock and bonds may not be for everyone. However, finding a way to invest in yourself is crucial. Whether that means starting that business you’ve always wanted or even going back to school to land your dream job. Whatever it is, make sure it is for you and it will benefit not only your finances, but also your happiness.

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