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7 Financial Decisions to Make Before 25

According to CNN, getting started with saving 20% of your income, organizing your expenses wisely, and taking good care of your health are a few of the financial decisions that any young person needs to make before the age of 25.

Administrator

22 December, 2023

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(TNO) Starting to save 20% of income, managing personal expenses wisely, and taking good care of health are a few financial decisions that any young person should make before the age of 25, according to CNN.

Keep track of your own expenses

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Calculate your monthly expenses accurately, even if you’re not good at math. Add up all the sources of income you have to create personal income, then subtract what you usually spend money on. If the result you have is a positive number, you have savings. Otherwise, it’s time to cut back on expenses.

If you can’t remember everything you bought, try replacing cash with credit or debit cards to have a list of all expenses. But there is a small note for you that people tend to spend more when swiping cards.

Start saving 20% of total income

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Whether you tend to spend or save doesn’t matter. To improve your budget, you need to recognize the core drivers of your financial decisions.

According to Gildea, everyone’s relationship with money originates from childhood and is influenced by how your parents approach and talk about finances. “You need to understand how you view money, what drives your shopping habits, and what can restrain your spending decisions,” Gildea said.

Take good care of your health

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This is to avoid the risk of having to see a doctor when you are still young, healthy, and not very financially secure. Don’t cut back your budget for health insurance.

Manage student debts

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In the US, $35,000 is the average debt that a student from the 2015 class has to shoulder. If you have to borrow, choose carefully and compare the long-term impacts of different loan options.

Start saving for retirement

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It may be good to work for another 25 years before retirement, but starting to save now may make more sense. Why? Because you are still young, and the savings have more time to accumulate. Just a little money from your 20s can bring you a considerable sum when you retire at the age of 60.

Set goals and budget

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Whatever goals you have in life, from early retirement to world travel to buying a house, they all require money. Knowing what you are working for is one of the ways to keep yourself motivated and focused.

Small miscellaneous expenses like repairs, buying a cup of coffee, or last-minute costs can increase your cash flow. So, use credit cards to pay for essential items like necessities, and use the remaining cash for weekly expenses.