With a nation like U.S which is already struggling with a huge amount of national debt, job cuts, rising prices and a troubled economy, it becomes all the more essential for the present generation to learn the importance of financial planning as well as managing their personal finances effectively right from when they are in their twenties. However, the trend has been just the other way round wherein most people tend to spend more than what they earn and then inevitably fall into the debt trap that leads to a much troubled life in their 30’s and 40’s.
To avoid this kind of a financially unstable situation in future, youngsters in the U.S who are in their twenties should take the responsibility to start planning wisely and take measures to avoid making financial mistakes and work seriously for a financially better tomorrow.
Let’s discuss some of the ways through which this financial stability can be achieved as mentioned below:
1) Avoid getting into credit card debt: The credit card debt is one of the highest contributing factors to the national debt in the U.S. Due to the abundance of many credit card companies wanting to eagerly offer credit cards readily without any prior credit checks, many people in America use this as their very means of paying most of their expenses without being bothered to pay back the overdue amount. Due to this reason, a lot of people have got into credit card debt with higher interest rates being charged for every single amount that the credit card holder misses to pay. If at all you are a shopping freak and like to spend a lot through your credit card then it’s high time that you refrain from doing so.
Additionally, if you are already under the burden of credit card debt, then try negotiating with your company and find out ways by which you can settle your debt at a reasonable interest rate each month and save yourself from getting into the trouble of paying hundreds and thousands of dollars as interest payments.
2) Planning for retirement: One of the best methods to make your future financially secure at the age of 25 is by planning and saving money for your retirement. Accounts such as 401(k) and IRAs are a very good means of saving money and earning income through compound interest gained on the accumulated amount. At the same time these accounts are tax free helping you to withdraw your money at a later date to maximize and enjoy more on your returns.
3) Maintaining an emergency fund: With so much of uncertainty prevailing in the job market, it would be a wise step to stack away a little money each month or towards the beginning of each year when you plan for your yearly expenses into a savings account that can serve as an emergency fund for you in times of your financial need.
Though this concept might not be very welcoming to many who are spendthrifts and hardly like to save money, however emergency funds such as these can help you to sustain even in circumstances where you might be out of job, or into medical emergencies or any kind of short term disability for as long as 6 to 7 months at a stretch. This in turn will save you from borrowing any money and get into the habit of accumulating debt in the long run.
4) Health insurance cover to avoid unwanted medical expenses: Though going for health insurance cover is quite expensive, but any kind of medical emergency can be quite troublesome and financially devastating. However, if you try harder and make an effort to pay as little as you can towards your health insurance premium, then it can really be of great help to pay off all your medical expenses without you having to borrow and get into debt.
5) Try to make a living by building your career: Amongst various other things that might be bothering you at the age of 25, is how to build a career and make a living so as to make your life financially secure and stable. Though there are many challenges that you might have to face such as lesser job opportunities, rising costs and increasing personal debt, yet the availability of more resources for the present generation can definitely help you to find ways and means to earn for your livelihood in your twenties as well as help you to save for your retired life as well.