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Life comes at you fast in your 20s—one minute you're navigating your first job, and before you know it, you're contemplating the looming "big 3-0" with a mix of anticipation and dread. But whether you're ahead of the game or catching up, there's one thing you should definitely have down by the time you hit that milestone: your financial know-how. It’s more than just avoiding credit card debt (although that’s a good start). To truly thrive, mastering a few key financial skills will set you up for a stable, fulfilling future.
So, what should you focus on? Let’s dive into the top five financial skills everyone should have under their belt before turning 30.
1. Budgeting Like a Pro
It might sound obvious, but creating and sticking to a budget is the cornerstone of financial success. If you’re still throwing random guesses at where your paycheck goes each month, it's time to get real. Budgeting doesn’t mean you can’t enjoy life—it just means you get to enjoy it responsibly.
Think of it as a spending plan rather than a restriction. Apps like YNAB (You Need a Budget) or good old spreadsheets can help you stay on top of things. And here's a pro tip: automate savings. Set aside a portion of your income for long-term goals before you even see it. The trick? You won’t miss what you never had. Start with saving 10-20% of your income, and thank your future self later.
2. Understanding How Credit Works
Credit can feel like an abstract concept when you’re young, but it’s one of the most important tools in your financial toolkit. Your credit score is your financial reputation, and it impacts everything from getting approved for a loan to scoring a good deal on an apartment. Make sure you know how your credit score is calculated (hint: paying your bills on time is crucial) and monitor it regularly.
Building good credit early on sets you up for financial ease later in life. Want a mortgage, car loan, or even a business loan someday? Your credit history will be a key factor.
3. Mastering the Art of Investing
Okay, you don’t have to be Warren Buffet by 30, but getting the basics of investing down is critical. Investing can feel overwhelming, but it’s one of the most effective ways to grow your wealth over time. Start with understanding the difference between stocks, bonds, and mutual funds, and know how compound interest works in your favor.
You don’t need a lot of money to get started either. Platforms like Robinhood and Acorns have made it easier than ever to start small. And here's a little nudge—trading platforms like Deriv offer demo accounts where you can practice trading without risking your actual money. It’s a fantastic way to dip your toes into the investing world, learning as you go, without the stress of losing your hard-earned cash.
4. Risk Management: Preparing for the Unexpected
You can have the best budget and the savviest investment plan, but life has a funny way of throwing curveballs. Risk management is about preparing for those "what if" moments—what if you lose your job, face unexpected medical expenses, or even a global crisis disrupts your financial plans?
This is where having an emergency fund comes into play. Aim to have 3-6 months' worth of living expenses set aside for emergencies. And yes, this fund should be separate from your general savings. When something unexpected comes up, you’ll want to cover it without derailing your financial progress.
5. Learning How to Trade (Wisely)
Yes, traditional investing is crucial, but in today’s digital age, learning to trade is a skill that can take you even further. Trading, particularly in markets like forex, stocks, or cryptocurrencies, can offer lucrative opportunities. However, it’s not for the faint-hearted—it involves understanding trends, being disciplined, and managing risk.
Platforms like Deriv can be a good place to start exploring this world. They provide access to different markets such as forex, cryptocurrencies, and even commodities—all with user-friendly interfaces and demo accounts. This means you can try your hand at trading without the fear of financial loss, helping you build confidence as you learn.
In Conclusion:
By the time you hit 30, it’s less about having everything figured out and more about laying a solid foundation for your financial future. From budgeting like a pro to learning the ins and outs of investing and trading, these are skills that will help you not just survive but thrive in the years to come.
And remember, practice makes perfect. Whether you’re just starting to save or dipping your toes into trading with a Deriv demo account, every step forward is a step toward financial freedom.
Deriv offers complex derivatives, such as options and contracts for difference (“CFDs”). These products may not be suitable for all clients, and trading them puts you at risk. Please make sure that you understand the following risks before trading Deriv products: a) you may lose some or all of the money you invest in the trade, b) if your trade involves currency conversion, exchange rates will affect your profit and loss. You should never trade with borrowed money or with money that you cannot afford to lose