It is a fact that if you want to retire early, you must begin saving early. The majority of serious income earners are in their 20s. Unfortunately, most of them don’t think it is possible to achieve financial independence in their 20s. This is because they have failed to establish good habits that will make it happen. For those who have mastered healthy financial habits, they have reached their financial independence while still in their 20s. With that said, another fact emerges, it is possible to attain financial independence in your 20s and here is how you do it.
1. Embrace The Frugal Lifestyle
In your 20s, you are probably starting out, unless you are one of those who come from those family empires and don’t have to begin from the bottom but already have a plush office and a fat check on day one. Most people in their 20s are usually college kids with low wages. This is why at this point expenses should be as minimal as possible. Ditch the car for public transportation, take a roommate to share the cost of rent, buy second-hand items rather than brand new, avoid eating out and cook instead and so on. Embrace all the frugal living qualities and you will find that in a year, you have saved a considerable amount of money. You might not be wearing designer brands now and with no public image to show off but later you will thank yourself when you are debt-free and making impressive financial progress.
2. Learn Negotiation Skills
Before leaving for college, it was your parents who fought all your battles. However, right now in your 20s, you will be forced to fight your own battles and win if you want to make progress in life. When buying items, take a mental note that not every price listed alongside an item is the final price. This goes for most things, from the rent you pay, your salary throughout your career and to most of the personal items that you buy. Try to negotiate for a better deal than the one you are presented with and in most instances, you might find that good deal. For you to achieve that fat bank account, avoid paying full price for most of the things you buy and refuse to take a salary that is less than you are worth. Don’t forget to make yourself worth the six-figure salary by obtaining more job skills.
3. Reduce Long-Term Credit Card Debt
It can be tempting to use credit cards to buy new furnishings and lovely items for your first home. Strongly resist that urge and use your credit cards only when you have a real emergency. You could instead go where the garage sales are and practice your negotiating skills and finally get a great furniture deal. Reduce your credit card spending because that is the only way to avoid that long-term credit card debt. However, if you have already had a huge credit card debt, treat it as an emergency and pay it off as much as possible and fast. Credit card debt is one of the major financial setbacks people in their 20s experience.
4. Closely Track Your Expenses
It doesn’t matter whether you are tracking your expenses on an app or in a spreadsheet. Just know how much you bring in and how much you spend. Most people who retire young and rich began their financial independence journey by closely monitoring their spending habits. They knew exactly how much they need to retire comfortably. However before you reach that point while in your 20s, you have to understand how much you are spending before you begin planning your retirement budget. When you achieve financial independence in your 20s you might retire with an impressive nest egg in your 30s.
5. Use Technology Where You Can
There are some great apps out there that are designed to help you save and earn more. Some of the easiest and quickest are most definitely the cashback apps. Some offer cashback at the point of purchase, if you go through the app to buy. Other apps can refund the difference if your purchase drops price after you have bought an item.
6. Get Your Retirement Goals Clearly
You can only be on the right track to retiring early if you have set your target date. With your retirement plan in place, you can then focus on execution. Execution of the retirement plan means sending some good amount to your retirement account. In most cases, with many of these retirement accounts, the earlier you want to retire the more benefits you get. You can consider automating the payments to your retirement account. When you automatically send money to your savings, retirement or investment account you will never see that money and there will be no temptation to spend it.
7. Maximize Your Income
Generating more income sources is a great way of achieving financial independence in your 20s. You can increase your revenue by finding a part-time job, beginning a side hustle and exploring the passive income opportunities online. In your 20s you are energetic and could do various jobs to have various income streams. More income means more savings and investment. Avoid having more income streams only to use the money on unnecessary expenses, instead, have the money and use it to make your investments more solid. It is a faster but hard way to achieve financial independence. This is for those willing to put those extra hours and truly work hard relentlessly.
8. Keep Gaining Skills
Learning should never stop, even when you are at the peak of your career. Enroll in relevant courses that will boost your knowledge and make you more competitive in your field. You will increase your salary worth which means high-income levels for you. Don’t forget to negotiate for an even higher amount because nothing is impossible when you are truly determined to make it.
9. Long-Term Stock Market Investments
Investments in stocks have overshadowed most investment products especially the long-term ones. If you begin investing early in your 20s, you will reap impressive benefits buy the time you retire 20 years later. Doing this in itself is a good sign of financial independence. Keep close touch with friends and colleagues who have invested in long-term stocks and compare the best deals and choose the best.
10. Keep The Best Company
In your 20s, it is easy to fall into the life of party after party with no real focus, thanks to friends. You might have your whole life ahead of you and destroy it. Begin by keeping friends who share the same ideas as you. Connect with others who also want to achieve financial stability in their 20s. This way you will be inspired to save, create more income sources and put your money in long-term lucrative investments. In short, have the right people influencing you and surrounding you.
Financial independence is built by a strong foundation. Strong foundations are better when they begin early, therefore begin now when you have all the options at your disposal. Financial independence while in your 20s is indeed possible.