Today’s guest post comes from Good Nelly. She has been blogging for 8 years and we’ve had the opportunity to become cyber friends. She writes over at My Way of Viewing and I’m excited to have her on the blog today to share what you can do in your 20s to embrace financial success. Enjoy!

It’s important to visualize how much your 20s impact you when you start building your financial future. Your 20s are the perfect time to focus on your career and start managing your money wisely. It’ll not only create more opportunities but also give you a breeze of financial freedom.

Let’s discuss in details why your 20s are crucial and what you can do to drive on the right track. Following a few steps and building good financial habits may change your financial life, and help you to manage your finances.

1. Keep the right mindset about money

The right mindset towards money can differentiate between being rich and poor.

Investing your money is much different from earning money. You might have a good steady income, but using that income to grow your wealth takes the right mindset, selecting good investment strategies, and proper financial planning.

You might have heard of the term “compound interest?” It’s a kind of income from your investments which grows upon its own growth.


Let’s clarify with a simple example. Let’s assume you have $200 and you invest it for 1 year. Your return on your investment is 10%. That means after 1 year you’ll have ($200+$20) = $220 in your investment account.

Suppose you have decided to invest again the next year. By the end of the next year, your total money in the investment account will be ($220+$22) = $242.


In the first year, the return on investment (ROI) was $20. But In the second year, the ROI is $22. The extra $2 growth is on your last year’s ROI, i.e. $20.


If you want to achieve this success in your investment portfolio, you must start investing as early as possible to meet your long-term goals like home buying or retirement.

2. Adopt a few financial habits

Your 20s are the best time to adopt new financial habits, set up your financial priorities, and remove bad monetary habits from your daily routine.

Differentiate between “what you like to have” and “what you need to have.” This way, you can restrict your impulse buying behavior. You may feel that spending a little over your budget may do no harm. But, if you purchase things based on your emotions, it may push you towards debt problems. And trust me, having a debt burden is the worst thing you can imagine.

The most effective way to stop your impulse buying is to avoid credit cards. Use cash instead of credit cards as much as possible. Also, pay off your credit card bills in full and before the due date to avoid getting into debt.

If you somehow manage to avoid credit cards but spend most of your income on buying unnecessary things, you might also fall into debt soon. To avoid this situation, keep your future goals in mind and plan a realistic monthly budget.

In your 20s, you must also learn how to properly categorize your expenses and savings.

Starting from the large amount, you must allocate money for all essential monthly costs. You can start saving for retirement by contributing to your employer-sponsored 401(k) plan or an IRA (Individual Retirement Account).

You should also save some money for your entertainment purposes like movies, dining, or travel. If you save a decent amount every month to meet these expenses, it’ll lower the pressure when it comes time to pay bills.

Apart from that, you may invest in insurance policies and other investment programs that’ll ease up your future life with comfort and security.

Prioritize your savings and set up automatic transfers every time you get your paycheck. It’ll help you stay on track and increase the balance of your savings account.

If you don’t have the proper knowledge about how to manage your finances in your 20s, you can seek the help of a certified financial planner.

3. Think about a debt-repayment plan

Facing debt problems in your 20s is a harsh reality for most young adults. If you let it grow, it may harm your finances, your mental peace and even your relationships. A huge debt load can prevent you from making good choices. When you start paying your high-interest debts, you’ll notice that a big amount of money from your paycheck is leaving hands. You might use that money to grow your retirement fund or you can save it for Medicare and even for emergency purposes.

So, it’s a wise decision to opt for a get out of debt plan before it’s too late.

Try to pay off your student loan(s) with a good repayment plan. Set up an automatic payment for your federal student loans; it’ll cut off 0.25% from the interest rate. Work out a plan to tackle consumer debts in your 20s and live a debt-free life.

4. Start building up your credit history

Your 20s are the best time to build your credit history. For that reason, you may have to take on some credits and keep it for a long time. Try to apply for different types of credit lines; it’ll help you to build a good credit record and earn a good credit score.

A good credit score is key to open many financial doors in your life. It will help you get lower rates on credit cards and loans. When you apply for a job, your employer may consider your credit report during the hiring process. Even your landlord may take a look at your score before granting a lease.

As you are young, your credit history length might be short. It’s a disadvantage as the length of the credit history makes 10% of the FICO score. But 35% of the score is based on payment history. So, if you pay bills on time and in full, you’ll hit the bull’s eye.

One more thing. Do not use your available credit limit too much, even if you pay off the entire balance every month. The lesser your credit utilization ratio is, the better. Try to keep it under the 30% mark.

5. Gather all your financial documents and secure them

The last thing you should keep in mind is to keep all your financial documents properly. These may include birth certificate, Social Security card, other official IDs, details of banking and investment accounts, insurance policies, household bills, and other important information in a secure place. Make sure to inform someone whom you can trust. The person should know how to get these documents in emergencies.

Author’s Bio: This guest post has been kindly contributed by Good Nelly, a financial writer. Good Nelly has been associated with Debt Consolidation Care for many years. She primarily writes financial articles in order to help others manage their finances and solve their monetary problems. Apart from writing, she loves to travel to new places.

What to do to embrace financial success | Simplifinances

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