How to Plan for Unexpected Expenses in Your 20s
Your 20s provide you with the chance to acquaint yourself with adulthood and all the responsibilities that being an adult entails. Not only do you need to account for the here and now, but you also need to adopt a sober mindset that considers the future. Smart decisions in your 20s can lay the groundwork for future success, while serious mistakes can put you in a hole. Unexpected expenses are going to come your way, and you need to be able to handle them. Here’s how you can set yourself up to manage the costs that surprise you in your twenties.
Create a Savings Account
Don’t leave all your money in your main checking account, where it is always just an ATM visit away. As its name suggests, a savings account forces you to be more serious about stashing money and letting it grow. The interest payments might be small, but they’re still something.
Make Modest Investments
While throwing your money into risky stocks or buying an expensive home are dangerous and foolish moves, making sound, safe investments is a great way to strengthen your financial health. By putting your money into bonds or mutual funds, you set it aside in a place where it will grow and provide you with greater financial security.
Budgeting might be the single most important skill that a young person should master. As long as you’re spending more than you make, you’ll never break out of a paycheck to paycheck lifestyle. The concept of budgeting is simple, but in practice it requires a bit of work. Keeping careful track of how much you spend in different areas will allow you to change your habits. Figure out how much you can spend while still saving money, and then force yourself to adhere to the limit.
Live Beneath Your Means
In general, it is always smart to live as if you were making less money than you actually are. There’s no reason you have to spend big just because you’re technically capable of it. Every dollar you save instead of spending will be another dollar that could come to the rescue in the case of an emergency.
There’s no telling what unexpected expenses the future might throw at your. One moment you could be living paycheck to paycheck without a problem, and then next thing you know you’re too broke to afford a dental operation or a car accident lawyer. Make smart choices, and you’ll have the ability to meet these sudden demands.