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Welcome friends. I have been thinking a lot about things I wish I’d known about money and finance when I was younger. My eldest daughter turns 20 in a couple of months (eek!) and I am already so proud of how mature and savvy she is. She rents her own flat and lives within her means, having just got a new job with a great company that will see her fly in her career.
This post contains the money wisdom that I’ve learned throughout my life and the lessons that I have tried to give her growing up. These tips have helped me navigate life’s ups and downs with confidence. I want to share them with you, my fabulous readers, in the hope that they may help you or can be shared with a young adult close to you.
1. Start Saving Early
Time is your greatest ally when it comes to building wealth. Start saving and investing as soon as you can, even if it’s just a small amount. The power of compound interest can work wonders over time.
2. Live Below Your Means
It’s tempting to spend everything you earn, especially when you’re young and eager to enjoy life. But living below your means and saving the difference will set you up for financial stability and future success.
3. Invest in Yourself
Your education and skills are your most valuable assets. Invest in them wisely by pursuing continuous learning and personal development. Whether it’s through formal education, online courses, or self-study, never stop growing. This will help you in maximising your earning potential.
4. Budget Wisely
Create a budget and stick to it. Track your income and expenses diligently, and prioritize your spending based on your values and goals. Budgeting gives you control over your finances and helps you make informed decisions.
5. Build Emergency Savings
Life is unpredictable, and unexpected expenses can arise at any time. Establish an emergency fund to cover at least three to six months’ worth of living expenses. This safety net will provide peace of mind and protect you from financial setbacks.
6. Avoid the Debt Trap
Debt can be a useful tool when used responsibly, but it can also become a burden if not managed carefully. Avoid high-interest debt whenever possible, and pay off any existing debt as soon as you can. Live within your means and save for big-ticket items instead of relying on credit.
7. Invest for the Future
Take advantage of employer pension schemes, and contribute regularly. Maximise any employer matching contributions as it’s essentially free money! Diversify your investments and stay focused on your long-term goals.
8. Don’t Compare Yourself to Others
In the age of social media, it’s easy to fall into the trap of comparing your financial situation to others’. Remember that everyone’s journey is unique, and what matters most is your own progress and financial well-being.
9. Plan for the Unexpected
Life is full of surprises, both positive and negative. Plan for major life events like marriage, buying a home, and starting a family, but also prepare for unexpected challenges like job loss or illness. Having a financial plan in place will help you weather any storm.
10. Seek Financial Independence
Ultimately, aim to achieve financial independence; the freedom to live life on your own terms without being reliant on a paycheck. Work towards building passive income streams and creating a solid financial foundation that supports your dreams and aspirations.
Remember, money is a tool that can either empower you or hold you back. It’s up to you how you wield it. By embracing these principles of money wisdom and making smart financial choices, you’ll pave the way for a brighter and more prosperous future.
Are there any other tips you wish you knew when you were 20? Let me know in the comments.
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