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With the coronavirus having claimed over 870,000+ lives and no reliable vaccine in sight social distancing and minimal contact seem to be the only ways to fight the pandemic and stay safe. This has resulted in millions of jobs and businesses closing down for good rendering families homeless and with much uncertainty about their future. This crisis and many that have preceded it teaches us one lesson — the importance of financial security. These terrible and unimaginable situations could have been prevented or at least abated if only we had gotten into the habit of saving and saving young. However, we have learned things the hard way. Going forward, we can only hope that this situation has made us wiser.The key to ensuring maximum financial security is to start by saving young, preferably as early as the 20s. Click To Tweet
Saving money for the future is very important; consider it your duty to yourself and your loved ones. When money accumulates over time, it appreciates its value. Put very simply, start saving as soon as possible in the long run. The more years we add to saving money, the greater will be its value and benefits.
Get Saving In Your 20s
Ah, our 20s! What comes to our mind when thinking of this wonderful phase of life? Adulthood, freedom, living on our own, college, parties and basically all things nice. Your 20s are made for fun but so are all the other years of your life if you work hard to ensure the same. So, next time you hear someone tell you to take it easy and not work so hard because you are in your 20s, please just fake a smile and say thanks for the advice! There is no right or wrong time to start taking life seriously or work hard. Whether you are in your early 20s, mid-30s, or even in your teens — doing the right thing is always wise.
Here are 5 reasons why you must start saving money in your 20s:
1. Less Responsibility
When we are in our 20s, chances are we are living with our parents or splitting the rent with a friend or two. We don’t need to worry about our spouse’s health insurance or children’s education or do up the nursery. When we are young and single, our expenses are curbed drastically and this leaves us with ample savings that we must be careful not to squander away.
2. Freedom To Experiment
With fewer responsibilities and commitments like marriage and children, 20-somethings have the freedom and leeway to experiment professionally, take risks, do two jobs, take on something challenging if it pays well, relocates if the job requires, etc. This makes it possible for 20-somethings to take the jump and improve job prospects early on than later in their career.
3. Living Frugally
No marriage and children imply we can live frugally and spend on what’s necessary for our 20s. We don’t need a big car for example, because we are perfectly comfortable biking it up to work or using public transportation. This means that you are left with significant disposable income. Now, there are two ways of looking at it. One, you can spend your income to live comfortably, even lavishly in some cases. Two, you can start saving up early.
4. Greater Financial Awareness
Thanks to digitization, a far larger population has access to banking, financial knowledge, and information. Digitization of banking has been a work in progress. However, post the COVID-19 pandemic, digitization seems to be the only way to go forward in the new normal. Businesses are pivoting from brick and mortar establishments to fully online or digital banking infrastructure. This means no more standing in line to encash a check or withdrawing money from an ATM or having to take a leave from work to visit the bank.
All your banking services are now available at your fingertips including investing in mutual funds and bonds, to opening a savings account, applying for a loan, etc. With millennials and generation Z being tech-savvy and spending most of their time on their mobile phones and laptops, digital banking is the perfect way for banks and non-banking financial service companies (NBFCs) to engage with their customers and vice versa. If you are in your 20s in this day and age, consider yourself lucky and leverage the digital revolution to save up and live a comfortable life. Take advantage of the easily accessible information to plan your finances.
5. Hassle-Free Retirement
Like we mentioned before, money needs to grow to increase its value. When you put money away in mutual funds, fixed deposits, or government treasury bonds, think of it as your retirement which is earning money by itself. These investments will earn you compounded interest which is “the process by which a sum of money grows exponentially due to interest more or less building upon itself over time”, according to Investopedia.com. The key is to start early.
Although your retirement may seem a lifetime away when you are in your 20s, the key to ensure it is comfortable. More importantly, according to Steven Richmond in his article Why Save for Retirement in Your 20s? “the longer you wait to plan and save for retirement, the more you’ll need to invest each month. While it may be easier to enjoy your 20s with your full income at your disposal, it will be harder to put money away each month as you get older. And if you wait too long, you may even need to postpone your retirement.” (Investopedia.com, 2019) So, make hay while the sun shines!
While it is not very nice to money-minded, it is certainly nice to be ‘money wise’. The recent global crises and economic volatility have proved how unpredictable life can be thus emphasizing the importance of financial security. The key to ensuring maximum financial security is to start by saving young, preferably as early as the 20s.
This is because when people are in their 20s, they have certain advantages over people who are older such as fewer family commitments, dependents, financial liabilities, and so on. Saving early also means more interest accrued on the money saved which means appreciation in its value. When the value of money increases with time, it secures our future with it. Although financial planning may seem a dreary topic to ponder about in our 20s, it is essential to ensure we have a healthy, happy, and fulfilling life.
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