It is often said that the ideal age to start investing is over 20 years old. I know, at that age most do not have much money, but they do not have many expenses either, and it is probably the best age to earn money more easily. That is why if we follow some advice on money and finances before the age of 30, our situation could be much better in the future.
It is an ideal age to take risks. Above all it is a good age because we give compound interest time to do its job. These are some of the things that you should have achieved in your 30s regarding our personal finances. If you are in your twenties, here is a little guide to start working on, because remember that 30 is not the new 20.
What you should do before the age of 30 to improve your finances
1. You must prepare an emergency fund.
An emergency fund is something that everyone should have, regardless of age and especially for families with children. It is advisable to have a fund that allows us to subsist and cover all our expenses and bills for at least 6 months, in the event that during that time we did not have any income. Others speak of a minimum of 12 months of emergency fund.
Calculate your monthly expenses (all of them) multiply it by a time period of contingencies and reach that savings figure first. That will be your emergency fund to secure yourself from setbacks.
2. Automated savings.
It is highly advisable to have a savings plan in which each month our bank takes a fixed amount from our account, no matter how small (2000-3000 Rupees) and that money goes to a savings or liquid investment account in banks.
On the other hand, if you decide to save more consciously, you can also invest in a low-cost index fund, where very small amounts of money can be invested.
3. You should start reading finance books.
Be careful, since I keep seeing how many of our readers love financial education articles but are bored by finance and stock market articles. I always insist that there is no great person on this planet that has not gone through finance books.
In addition, if you are able to recognize the direction of a stock market, you are also able to easily multiply your capital. And for this you must have a minimum of knowledge, which can be extracted from popular finance related books.
4. Live within your means but live.
20 years is an ideal age to save, but it is also an ideal age to enjoy. Don’t spend on those little pleasures, but avoid those expenses that you really know are unimportant. Above all, remember that if you are spending money to impress someone, you are probably not surrounding yourself with the most suitable people.
Also look for options to enjoy without spending money, because if you are not able to get it, over time you will not be happy with the work pressure for money in the world.
5. Stay out of debt for as long as possible.
Begins to use the most basic math. Sometimes buying something for cash saves us reasonable amounts of money. Sometimes, when you need a purchase, it is just a matter of waiting a few months to be able to make it in cash, instead of paying the interest generated by the purchase in installments.
Remember that before using a credit card, the amount of which you cannot pay in full at the end of the month, think about it, whether you really need it or not.
6. Learn to negotiate.
Over time, everything becomes a constant negotiation. Negotiate prices, negotiate your own salary, negotiate with suppliers … if you are not careful with negotiation, one day you will find yourself compromising with your financial life. There are many techniques for negotiation and I suppose there will be many books, although nothing better than learning from a good mentor.
7. Have a financial plan.
Remember that if you don’t have a plan, an objective or a goal, you will go on autopilot. And the autopilot tends to sometimes take us to places we don’t want to be. According to a study by a university, students who had an early plan and wrote it down on paper, regardless of their present situations, over the years were more successful than the rest.
8. Get rid of the most common bad financial habits.
Among the bad habits in personal finance we would have:
- Spending a lot of money on things you don’t need.
- Spending money on gambling.
- Live beyond your means.
- Earn for day to day and not save.
- The misuse of credit cards
- Bad investments
- Not giving due importance to financial education.
9. Recognize the habits for financial success.
There is nothing better for financial success than knowing the habits of true millionaires. Get rid of the habits that lead to poverty as soon as possible and start to acquire the habits that successful people have. Remember that sometimes, more than innovating, you only have to copy how others did it before you.
One of the habits that will help you if you want to become a millionaire is to understand how the stock market works. To do this, the best stock exchange books of all time are all over the internet as ebooks.
10. Learn to be smart.
Knowing that we are less intelligent than we think, will give us a higher degree of intelligence. There are some books that will help you open your mind and make you smarter. We also gave some guidelines with what you can do to be smarter in every way.
Some time ago we published a series of articles on how our own mind deceives us in all kinds of fields: friends, investment, business…. some will think that it has nothing to do with money, but it is not true. It all has to do with money. In fact, many of these partialities that we talk about, mainly hurt your finances, so 20 years is an ideal age to start getting rid of these types of bad thoughts to have your finances healthy in your 30s.