Financial planning is all about making yourself financially independent and paving the way for wealth creation. While it’s never too late to start planning your finances at any point in life, the twenties are the best time to turn the wheels of fortune in the right direction. Here are three reasons why it’s significant to start financial planning in your twenties and live a life of financial security and abundance.
The Beginning of Your Career
You see yourself at the junction of kickstarting your career in your twenties. While your income could be limited at this stage, so are your expenses. Therefore, setting aside even small savings can go a long way in avoiding unnecessary debt in the future. Once these small savings accumulate over a period of time, you can use them as capital to start a small business or start investing in financial instruments that can earn you interest and capital gains in the long run.
Nurturing the Right Financial Habits
Just like good habits start early, the right financial habits, too, thrive when you embrace them early in life. Your twenties give you the opportunity to adopt healthy money habits and be ultra-clear about your financial goals. You can start by making a monthly budget and transferring all that’s left to an emergency fund. The twenties are the most promising time to nurture financially prudent practices and make them a part of your lifelong spending behaviour.
The Power of Compounding
Financial planners across the globe vouch for the power of compound interest. Starting to save early can help you amass wealth over a period of time. While most people procrastinate savings to their thirties, those who start ahead in their twenties are the ones who reap the benefits of compounding like no one else. Beginning a decade earlier gives you an edge over rising inflation and covers you for future economic crises.
Creating financial milestones while you’re in your twenties can give you a roadmap to financial success in life. It’s wise to check your monthly credit card payments and spending to take stock of your financial habits and be money-smart. Lastly, start saving and investing consistently in your twenties and see how compound interest transforms these micro-investments because, at the end of the day, money makes money!