Welcome to money in your twenties! Our next series to help you better your financial future by focusing on important financial concerns in your twenties.
When we’re in our twenties, we’re likely entering the workforce for the first time with a full-time job. Maybe you have student loan debt, you’re figuring out your budget and understanding how to manage your cash flow for the first time.
All of this can be incredibly overwhelming, and most of us haven’t been properly taught how to manage all of this. So, we’re left to our own devices to [unlikely] get it right the first time. And if not, well, then we [hopefully] learn from our mistakes.
One of the more difficult areas to balance in your twenties is your money and a satisfying social life. We’re typically not comfortable talking about how much we make with friends, or how we’re choosing to save or spend our money. Let me tell you a secret… THAT’S OKAY. Let’s not be shameful of our own financial situation compared to others and embrace that everyone’s financial journey is different.
Let’s dive into some key money tips shall we,
- Don’t let Lifestyle spending exceed 30% of your take home pay
If you follow the 50/20/30 rule to budgeting, you’re familiar with the concept that 30% of your take home pay should be allocated to discretionary spending as a rule of thumb.
It’s important to know what the maximum amount of money you’re comfortable spending per month is. Most of our lifestyle spending is centered around our social life – dining out, entertainment, alcohol, etc. knowing what your limit is and keeping track of where you’re at throughout the month is essential to make sure you’re happy within your financial life.
- Understand your wants vs your needs
Giving into wants versus needs too often can be a real budget buster. We’re influenced by what is around us, it’s easy to cave and we’re quick to make impulsive decisions. KNOW what you need and what you can afford.
“You can have anything; you just can’t have everything”
– Paula Pant, Afford Anything
Our social lives can throw our wants vs needs off balance. It’s difficult to not want to stay up to date on all the latest trends (Target, you’re not helpful for my budget!) when we’re talking with our friends or scrolling through Instagram.
Personally, I like to treat myself occasionally. I’ve also found it incredibly helpful to only make online purchases on Fridays. Being more intentional about when I spend money on lifestyle items has significantly helped me reduce impulsive purchases. (I’m talking to you Instagram Ads!)
Tip: Don’t cut yourself off completely from buying things you enjoy. Just keep in mind your financial goals and ensure your purchases fit your why.
- Talk to your friends about money!
I recently was having a conversation with some of my girlfriends about how much we make. It’s such a taboo topic, and it shouldn’t be. I’ll be honest, it was WEIRD. Frankly, a salary means nothing. How comfortable you are with managing it, saving it, and spending it is what matters.
I’m not saying you must tell your BFF how much you make. But maybe the next time you’re sippin’ on some Rose with your ladies, talk to them about how much they allocate monthly for entertainment. You can get a good conversation going without making it uncomfortable by talking about salaries.
You might be surprised to find that your friend is on the same page as you and you suddenly have found yourself and accountability partner!
- How to save money while you’re out socializing
Finding fun, alternative ways to hangout with your friends without spending too much money is only going to benefit your budget and your long-term goals!
- Drink water!! Not only is it good for your health, it’s good for your wallet.
- Don’t go out to dinner super hungry. You’ll overindulge. Don’t deny this, it’ll happen. You know it’s happened. I do it all the time, and I know I’m not an anomaly.
- BE HONEST – with your friends and with yourself. Don’t let FOMO get to you and practice the art of ‘no’.
- Don’t put yourself in situations that you can’t afford.
- Have a potluck and BYOB – my friends and I get together monthly, and we can make a meal at $4 or $5 per person. SO much less expensive than going out. Also, the markup on alcohol? Don’t even get me started.
- Have your friends over for some snuggles and a movie. There is nothing better than a night in of quality time and great conversation.
- Plan for big expenses: You and your friends want to go on a vacation to wine country or NYC and see some Broadway shows? Set a budget and determine when you want to go to determine how much to save each month OR determine how much you can save every month to determine how long it will take to reach that goal.
- The main thing – don’t go into debt on big lifestyle expenses, being able to pay in cash in incredibly gratifying and freeing!
Lastly: always know your why. We keep our spending in line so we can save for long-term goals and have a lifestyle that is meaningful to us. Thinking of a dreamy South of France vacation for your next milestone Birthday or living in that renovated Farmhouse someday? Having your goals in mind will make those little lifestyle sacrifices today worthwhile.
“You must take personal responsibility. You cannot change the circumstances, the seasons, or the wind, but you can change yourself. That is something you have charge of.”
– Jim Rohn
Carolyn Rowland is a CERTIFIED FINANCIAL PLANNER™ passionate about empowering individuals to take control of their financial landscape. “We often tend to place our own priorities on the back burner for others, resulting in sacrifices we don’t often realize we’re making.”Carolyn believes in taking a values-based approach to financial planning. “Together we’ll define what matters most to you, what you want your life to look like, and develop a plan that fits your lifestyle.”CC
Carolyn Rowland is in the Milwaukee WI, area.