How to Financially Plan in Your 20s

Making the right financial decisions in your 20s can long-term give you a great lifestyle for the rest of your life.

The following are some tips I've learned through seeking out people who were older and wealthier than me:

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• The desire to have solid finances in your 20s.

1. Find a mentor who is good with money.
   
   You may have someone in your family who always seems to have money under control. This doesn't happen to people by accident. Take the time to listen to what they have to say.

2. Read books that increase your financial knowledge, including those traditionally geared for older age groups.
   
   After awhile, you'll begin to notice trends that keep coming up over and over. You may not want to take the advice of every book at face value, but it gives you a great starting point to thinking for yourself.

3. Learn the concept of delayed gratification.
   
   Short-term sacrifices can become huge long-term gains. Most people in society want things immediately, which is why most people are in debt their whole lives. Rich people often do things that average people find uncomfortable. If you take the time to live below your means and eliminate your debt in your 20s, you can easily be a millionaire by retirement (and retire younger) just by saving what you'd be paying banks in payments. At the very least, learn to stop borrowing money as a solution to your problems. It's not always easy, but it's worthwhile.

4. Find ways to increase your existing income.
   
   Most people are raised to be employees, but it's not your only income option. Investments are good as well, with the realization that they usually only work long-term (5 years+) as opposed to short-term. Never invest in anything you don't understand. If you have no debt, a matching 401K through your job or a Roth-IRA are a good place to start.

5. Part-time businesses are also great to explore in addition to your job and can be transitioned into large income sources.
   
   There are a lot of great businesses out there that take very little money to start-you just have to be willing to do the work and get things to the point your physical presence is not required for the business to work. There are general business books that can show you how to do this.

6. Don't be afraid of making mistakes.
   
   I don't mean go out and do stupid things on purpose. It's just sometimes things happen that you thought would work out right but they don't. Instead of letting it bother and discourage you, learn from it and move forward.

Tips & Warnings

• If you start several small businesses that bring in repeat income, you can see how those incomes can be "stacked" to create wealth. This is also known as residual or passive income, which can produce you both time and money if you're willing to do a few years of intense initial work. From a personal standpoint, this is what is helping me retire before I'm 30. I can't tell you what's on TV every night, but at this point I really don't care. Getting to do the fun stuff yourself instead of watching other people is great!

Resources

• Free Life Skills/Success Resources List
• Writer's Reference Directory and Guide--Updated Version (Includes Ways of Making Money by Writing)
• Index of Cougar1002's Articles (Sorted by Topic--Find More in the Business, Career, and Personal Finance Sections)
• Cougar1002's Author's Blog (For Updates/News/Latest Articles)

[goodpeople]

on 7/18/2009 "Learn the concept of delayed gratification"
great article.thanks

[Humma]

on 4/23/2008 You are right! Some of us like to watch people make money and spend our time just doing that.

[luv2laugh]

on 2/16/2008 thanks for the article. My husband and I are currently trying to get rid of our debt and then start planning for retirement. It is a general, yet helpful article. :)