Lesson Investing by Life Stage
Learn how to get your investing on track as you deal with stepping into your 20s.
Your 20s are said to be some of the most exciting years of your life. It's a step into adulthood that still gives you the freedom to be young. You could be starting at a new school, or graduating and going out into the world to find a job in your field. It can be a very hectic time of life where you learn many lessons - and personal finance is often one of those lessons.
You've probably heard the “stop buying expensive coffee and you'll be able to afford a house” mentality, but we all know that isn't realistic anymore, if it ever was. Your 20s hold many new debts and bills that you didn't have to deal with before, as well as many new living expenses. So in all seriousness, buying that coffee likely isn't what sent you into debt, and treating yourself every once in a while likely isn't what's keeping you there. Yes, the small things add up, but it's the big things you need to look out for the most. Saving money isn’t just about eliminating unnecessary expenses, it's also learning what to do with your finances and how to help yourself get ahead. From paying off debts to learning about budgeting and investing, your 20s can be an integral starting point to planning for your future.
Budgeting
Budgeting is an important skill to help you succeed. Knowing what money you have coming in and how much of it goes to necessities is key to planning ahead. Use resources around you such as school courses, free online videos or
budgeting calculators to help you with this process. These tools can help you identify extra income that you can put towards your savings. It is important to have
these savings for many reasons and it can be a lot harder to do anything with your finances when you don't have any.
Paying off debt and starting your emergency fund
Once you’ve freed up some money from budgeting, there are many options on what you can do with it. Paying off debts and saving up for emergencies are great options to explore. By paying off any debt you have, you can focus on putting extra funds towards your future, as well as save yourself money in the long-run. Imagine you owe $600 on a 7% per year interest rate, by paying it off you have then saved yourself $42 a year. Look into interest rates on your debts and credits to see where you can save the most money by paying off debt first.
It’s also important to tuck money aside for emergencies if you can, so you have a cushion to protect you against unexpected expenses. Calculating how much money you want to contribute to your savings and debts respectively can help you feel more in control of your finances.
It’s okay to start small
Another key thing to consider is where you keep your money. Look into the different account types to see what will work best for you. See what these accounts have to offer you to help you choose. You can learn more about Questrade’s account types
in our articles on:
RRSPs,
TFSAs,
FHSAs,
Margin accounts, and
Accounts 101. You may not be in a position to start an investing account and that's okay! Any time is a great time to learn which investing accounts could be right for you in the future.
Investing
After all of your budgeting and planning, if you still have some money left over, you can begin to explore the world of investing. If you find yourself fascinated by investing and want to learn more, we have many
resources to help you along the way. If
you'd rather invest without putting too much time into it, you can read
here on how to help pay yourself first, or explore account types that can help invest for you like our
Questwealth accounts.
Note: The information in this blog is for information purposes only and should not be used or construed as financial, investment, or tax advice by any individual. Information obtained from third parties is believed to be reliable, but
no representations or warranty, expressed or implied is made by Questrade, Inc., its affiliates or any other person to its accuracy.
