So there is a lot of confusion regarding how you should be spending your time in you 20’s, and given there always seems to be pressure to fit in. That said, despite all the negative press regarding things like the work habits of the millennials, or the financial situation of the 20 year olds, this, believe it or not, is a prime time to actually set yourself up majorly for a lot more money in the future.
So the question still remains what can you do in your 20’s that will make you financially successful not only in your 30’s but ideally 40’s, 50’s and well beyond into what many would call a happy retirement.
Invest Everything As Soon As Possible
Now here is some math that might actually surprise you. If you were 20 years old and decided to invest $1 into something that profits you 7% growth rate year on year, by the time you’re $65 you will have profited $20 on top of the initial $1. Meaning that every $1 you spend on items like bubblegum, soda, or candy bars, is actually worth $21 in roughly 40 years from now.
This is the power of compound investment and it shouldn’t be taken lightly. This is the true beauty of being 20, because when you’re young like this, you have so much time to invest money into something that can create an amazing financial future for yourself.
Open a Roth IRA
A Roth IRA essentially is an account that lets you keep the profits of your investments by not taxing you on the capital gains you’ve made throughout the years. And because you’re in your 20’s typically this means you’re in a lower tax bracket anyways. When you can minimize how much money is taken away from you, you’ll find yourself in a good position to have something left over for the later part of your life.
Consolidate Your Debt
One of the things you should consider doing is becoming financially literate in all aspects of your life. While being young inherently is synonymous with taking risks its should also be a time to learn the in’s and outs of the financial game. When you understand why it’s better to take a $1000 loan out to consolidate a $1000 debt on a credit card, you’ll most likely end up saving yourself hundreds of dollars in the long run on interest.
Take Some Risks
One of the last things you should be aware of to make your 20’s the best time of your life financially is taking some risks. There’s aggressive ways to take risks and conservative ways. One of the most conservative ways to take a risk is to invest into a business. During your 20’s it essentially is a free pass to do all the crazy ideas you’ve ever wanted to do. So even if you fail a business, you still will have the rest of your life to recover.
These are just some practical tips to get the ball rolling for you for an abundant financial future.