Financial independence is about the journey, and it is about the road travelled that is most enthrilling than the destination itself.
Below is my list of 10 things you should do in your 20s to achieve Financial Independence.
- Have a marketable skill, and or education: Usually this means having a formal training in college/university and or skilled trades. Choosing a profitable and in demand career path would go long way in making you achieve financial independence.
- Follow a budget: Getting in the habit of budgeting is absolutely critical. You can not only understand yourself better but you know how your impulses at times may get better of you.
- Automate Savings: One way to discipline yourself about your finances is by automating your savings. Contribute a set amount to your TFSA, RRSP, and other accounts on a monthly basis. You can use the remaining monies for your expenses. It is as good as not having the “contributed monies” and building up your savings.
- Pay off your credit card debts: When in your 20s, you tend to be optimistic and live life with a passion. Not having a regular adult job in your early 20s translates into racking up credit card debts. You must see to it that it is payed off before you enter your 30s.
- Pay off your student loans: Echoing the sentiments above, paying off your student loans in your 20s before starting a family is absolutely critical for financial independence. I hate having to see a chunk of my pay cheque gone towards my monthly student loan payment. This makes me more determined to pay it off altogether.
- Start an Emergency Fund: Having a financial cushion is a must, should things take a turn for the worst. I usually tend to keep 6 months worth of expenses in my Emergency Fund. On another note, when I foresee big expenses, I save up first and then spend it.
- Start investing in TFSA, and RRSP Account: Start contributing to your TFSA right away. The least you can aim for is a monthly contribution of $100 into a mutual fund and or an index fund. Also, take advantage of your workplace pension plan if they offer to match your contribution.
- Start saving up for a property down-payment: If you plan to buy a property, start saving up now. Also, if you are contributing to your RRSP, you maybe eligible to withdraw your RRSP funds tax-free (you would have to contribute those amounts back in 15 years) if you are a first time home buyer.
- Expand your horizons: Read, travel, network, interact with more people, and build relationships.You have a long life ahead of you. Build it slowly but surely.
- Don’t let money consume you: Relax, and live every moment. You can always plan for the future but don’t let that stress your present.