When you are young, you have a free-spirited mind; you probably don’t think much about money, finances, and expenses. You just graduated, are looking for a job, and want to juggle around while looking at life and making the most out of it. No matter how much rich influencers or big-pocketed individuals push the idea that “money doesn’t bring happiness or can’t do much for your life,” they preach because they have it now. Being in debt feels like hell. Money is like a medium that helps drive the motor of life. Twenty is the right age to focus on saving, investing, and budgeting, as it will help sow the seed of future wealth. As they say, money grows from money. To become financially stable, individuals must prioritize budgeting and adopt a strategic approach toward revenue generation. Budgeting allows you to secure your life and do the work you enjoy the most. 

If you are starting a career or a business or have been in your job for quite a while, then this is the right time to integrate budgeting into your life. It will help you cut corners in the early years of your life to imbibe financial discipline. As a business owner, it gets tricky when taxes, payroll, and necessary deductions are all involved in your cash flow. You can consult a Tulsa small business bookkeeping firm to resolve this issue.

Budgeting Strategies for Young Solopreneurs and Professionals

1. The 50-20-30 Rule: Managing money is challenging and quite complex if you don’t know where all your cash flow goes. Allocate 50% of your income for needs, 20% for savings, and 30% for your optional wants. The needs include fixed costs like children’s fees, rent, monthly EMI, insurance, debt allowance, groceries, car payments, credit card payments, and utilities. The 30% amounts to your additional expenditures like entertainment, vacations, dining out, streaming premium subscriptions, getting your hair and nails done, and other non-essentials. The remaining 20% is deposited into your savings. You can also be active about investing and put that 20% of the money into your SIP account, also known as a systematic investment plan. You can deposit a fixed amount into your SIPs every month, which will grow over the years. Additionally, you can invest your money in mutual funds, which can provide better returns annually.

2. Mind Your Spending & Build an Emergency Fund: While allocating your money, you must also be mindful of the 30% you spend on yourself or to pamper yourself. It will frustrate you to put in all the work each month and not be able to buy anything along these lines. You can certainly expend on your wants; however, neglecting set financial goals can only delay it further. The more you save, invest, and cut down on unnecessary expenses, the closer you will be to monetary stability and freedom. You must follow the budgeting rule no matter what. Set aside your compensated rewards and bonuses for saving. Take 6 to 12 months’ worth of earnings and put it into an emergency fund account; it can become handy for medical emergencies.

3. Manage Your Debts: If you have taken student loans, car loans, or a house loan, it might become a burden and an obligation in your financial journey. Pay your debts using methods like the debt avalanche and systematically reduce your debt interest. Don’t take on too many credits or fall into the traps of schemes that can bind you to credit and debt forever. Remember, be clear about your income, expenses, and debt. You can cut your daily expenditures to save aside some money that can be used to pay debts.