You can’t deny the fact that your net worth is an important number which can tell you a lot about your personal finance. It is more than just a few digits which can measure your financial success. There are many who have already calculated their net worth and they’ve finally reached a conclusion that it requires a little bit of shine and yet they find improving their net worth pretty difficult. With a little bit of willpower and guidance, it is possible to build your net worth and preserve it.
What if you’re in your 20s? When you’re in your 20s, the thought of your net worth is perhaps the last thing that comes to your mind. There are many twenty-somethings who remain economically challenged but it’s possible to manipulate around the impediments which keep you from building wealth and boosting your net worth. Here are few things which bar you from accomplishing your financial goals.
1: Living without having a budget in mind
Budgets have always earned a bad reputation due to the restraints that they place on the spendthrift people. But if you take a closer look at what a budget is, you will know that a budget isn’t designed to restrict you from doing something that you love to do. It is just designed to assist you in managing where your money goes every month. If you’re in your 20s and you still don’t have a plan in your mind, you will probably face a tough situation with regards to savings. Unless you save enough, your net worth is never going to increase.
2: Owing high interest education loan debt
You can’t deny the fact that student loan debt has become an ally for life for several youngsters and for many; this is even preventing them from accomplishing the financial goals that they’ve set for themselves. Sadly enough, you can’t just wave a magic wand and wipe off your debt but you can definitely do something to cope with high interest debt easily. How about locking in a low rate by refinancing your loans and making it easier to be paid off? Once the high interest debt is gone, you can devote your money towards your savings account.
3: Procrastinating your career goals
It is more likely that when you will hit the age of 40 or 50, you will earn way more than what you’re earning now. Does that mean that you will take no step to jumpstart your career unless you reach the age of getting bigger paychecks? You may have a grabbed a job which is still not a dream job but don’t ditch it as this might be a good place to develop your skills and boost your experience. Hence, you should put in more efforts to your career, especially when you’re in your 20s and it is only then that you can see a bigger paycheck in the near future.
4: Flying without an emergency cushion
You will always find financial analysts tell you that it is a wise idea to save for retirement even though you are in your 20s. But do you only have a 401(k) or an IRA to save money for your retirement? How about creating an emergency fund? If you don’t ever want to end up in a vicious cycle of debt, you should be ready with an emergency cushion. You should be able to withdraw funds from this account in an emergency and still have enough left for the future.
5: Not giving priority to a retirement plan
Americans are busier in planning their vacations rather than their retirement. Don’t follow the herd. Even though you’re young enough to think of retirement, it’s never too early to start saving. In case you have obtained a job which has the provision of a 401(k) account, you should immediately grab the opportunity of stacking aside a portion of your income. Try to save enough so that you can at least qualify for the matched contributions from your employer.
Unless you’re someone who has won a lottery or you’ve inherited some fortune, your net worth isn’t going to increase much in your 20s if you aren’t making any positive effort. Try to sidestep the above mentioned obstacles and devise a plan on spending and savings to build a better financial future.