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As a 20-something, you probably know a little bit about being broke (unless you were born wealthy or won the lottery as soon as you were legal to play).

Being young and broke is a rite of passage most everyone goes through. While being regularly strapped for cash isn’t fun, you can learn some irreplaceable lessons during this stage of life.

These learning experiences can help you figure out how to make smart financial decisions and set yourself up for a healthy and financially secure future without any money struggles.

Pay attention to these 8 kinds of money struggles everyone should go through in their 20s.

1. Learning How to Live a Thrifty Lifestyle

When you’re in your 20s, being thrifty should become second nature to you. To succeed, it’s essential to learn the difference between wants and needs. For instance, eating takeout and buying lattes daily is ridiculously expensive — especially when you can make food and coffee at home for cheap!

Make the effort to learn how to live a thrifty lifestyle now, so you can gain a thorough understanding of what’s important and what isn’t, and make decisions accordingly. Once you do, this knowledge will serve you well throughout your life.

  • Learn how to cook — It’s healthier and far more budget-friendly than relying on processed or takeout foods.
  • Invest in a good water bottle and insulated coffee cup — Stop buying coffee to go or hitting the vending machines when you want something to drink. Filling a reusable cups is cheaper and, as a bonus, more environmentally friendly.
  • Use coupon apps — You can save some serious cash by using coupons and cash-back apps. Just be sure to do your research first, to make sure the ones you choose are safe. Always read the terms and conditions; you don’t want to download a rogue app or give away sensitive financial information. Sometimes the savings aren’t worth the cost.
  • Try extreme couponing — See how many items you can get for free or next to free! You don’t have to do it every week, but make a game of it every so often. You’ll learn strategies to save serious cash, which is another valuable lesson.
  • Shop at thrift stores — Not everything needs to be purchased new. You can buy clothing, household items, and other necessities or niceties for a fraction of the price. Why pay top prices if you don’t have to?

Essentially, you want to learn the art of smart spending. Figuring out the ins and outs on how to live a thrifty lifestyle while you’re still in your 20s will help you get through the rough years until you get better established in your career and start earning a higher salary.

2. Learning How to Protect Your Information

Identity theft is a real risk these days. With so much personal identifying information (PII) floating about, it’s important to make an effort to try to secure your data and stay safe with your money struggles.

According to the Federal Trade Commission, there were 1.4 million fraud reports in 2018, totaling a whopping $1.4 billion in losses. Crimes such as ID and credit card theft are on the rise, but on the plus side, ransomware attacks are down 20% for consumers. This drop is largely due to people storing and sharing data on the cloud.

Cloud-based technology is highly secure and increases your ability to keep your PII and financial information safer from people with nefarious intentions.

3. Figuring Out How to Strategically Manage Credit

Carrying plastic makes it so easy to spend nowadays, especially since easy card swipes in the store, and one-click ordering online has become the norm. If you don’t pay close attention to your spending, you might find yourself quickly spiraling into debt.

If this happens, it can be difficult to pull yourself out of money struggles. Keep these strategies in mind:

  • Take caution when applying for loans — Be wary of terms that don’t require you to make any payments for the first 12 months; this kind of deal isn’t as “free” as it seems.
  • Always read the fine print  — For any credit application or loan, have someone more experienced look over the terms with you, especially if you aren’t sure of some of them.
  • Maintain two credit cards — Keep one for everyday use and one for emergencies. It’s a good idea to have an extra one in case one account is compromised (this way, you’ll have a backup card in the event of a hack that temporarily shuts down your card).

Aim for cards that offer good rewards to avoid money struggles. This way you can get a little extra back for your spending. Be sure to pay your cards off each month though, or else it negates any rewards because you end up paying high-interest for your purchases.

When you’re broke, it’s easy to rely on credit. And it’s OK to use it when you have to carry a balance, but be sure to pay it off as soon as you can.

If it seems you can’t pay off a balance soon, though, consider getting a second part-time job or see if you can work some overtime instead to help pay the debt off more quickly. Once you fall into credit card debt, it can be hard to pull yourself out.

4. Achieving a Good Credit Score

Credit scores are a subject many people in their 20s don’t consider, but they should be thinking about it. It’s not always easy to do when you first start, but it’s well worth the effort to achieve and maintain a good credit score.

Here’s why:

  • You gain access to lower interest rates when you maintain a healthy credit score.
  • Someday you might want to buy a house! Lenders won’t deny you for loans if you demonstrate you’re a trustworthy borrower.
  • Landlords increasingly check credit reports. If you have poor credit, they may turn you down or require you to pay a larger security deposit.
  • Companies such as mobile and insurance carriers usually check credit scores. If you have a poor score, this can influence any terms you might be offered.

If you can earn yourself a strong credit rating, you’ll be golden. Reaching this status can help bring you to a point where you can begin to reach financial independence and achieve the lifestyle you seek. It takes time — so the sooner you start, the better off you’ll be.

5. Taking Control of Your Housing Budget

Housing will always be one of your largest expenses, so you want to be savvy in how you budget for it. According to 2018 statistics, millennials spent 45% of their income on rent by the time they reached 30. But overspending on rent is one of the quickest ways to stay broke.

If you’re currently living in a city that has a high cost of living, consider moving to a new, more affordable city, at least for a few years. For instance, an up-and-coming city like Charlotte is a great option for 20-somethings. It’s hip, has great restaurants, a happening nightlife, and is close enough to both the mountains and the beaches. No matter where you go, changing jobs can be a great way to boost your income and find new opportunities, as well.

Money Jar

Photo Credit -Pixabay.com

6. Spending Wisely on Transportation

While it may seem appealing to buy yourself your dream car as soon as you start earning a full-time living, this isn’t a smart strategy. A car isn’t a good investment because it depreciates significantly the moment you drive it off the lot. Instead, to save money, buy yourself a reliable used car that will give you access to the basics.

You’ll still have to pay for maintenance and insurance; however, it’ll be less than if you buy a shiny new sports car. If you want to save,  use public transportation solely for a few years.

7. Budgeting for an Emergency Fund

It may seem low on the priority list, especially if you’re struggling financially, but it’s important to set yourself up with an emergency fund. You can start small if you have to. As long as you save consistently, you’ll begin to see some accumulation.

Saving for an emergency fund will eat into your everyday lifestyle, but it’ll be worth the sacrifice if an unexpected huge expense comes up. And if it doesn’t? You still don’t lose. If you find yourself years down the road with an untouched emergency fund and a bigger paycheck, then you can tap part of it for that hard-earned vacation or down payment on something special.

8. Planning for the Worst

It’s a smart strategy to act as if each week’s paycheck might be your last. You never know when a layoff or business closure might happen. Potentially losing a job early in your career is scary, but it’s important to know it could happen. Right now, the economy is strong, but economists speculate that a potential recession is looming.

Never relax during good times. And don’t learn this money struggle lesson the hard way; have a strategy in place if you do lose your job. If you’re prepared with an emergency fund and a cushion of a few months’ rent and expenses, the pain of a job loss won’t sting as badly. Then you can put your entire focus on finding a new job rather than borrowing money to pay rent.

None of these fiscal activities are easy, but learning to master them can help you reach financial independence. As it currently stands, 62% of millennials (age 23 to 38) are living paycheck to paycheck — pretty scary, especially when you consider that many of these millennials are quickly reaching age 40. Make some careful moves and you won’t have to join this statistic.

Sure, you’ll probably need to live sparingly for a while, but it’ll pay off in the long term. Remember: “Thou shalt not be broke forever (even if it feels that way right now). If you think smart in your 20s and make good choices regarding money struggles, before you know it, you’ll be turning a corner, well on your way to financial independence and freedom.  

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