Three Reasons Why You Need To Learn How To Budget In Your Twenties
This decade of our lives is filled with a hundred different lessons to learn and mistakes to make. The twenties is a decade to try and try again pretty much on a daily basis. You are learning a lot about yourself while simultaneously learning how to navigate the adult world you've now been thrown into.
And you know what makes that adult world turn round and round?
The thing that most people in their twenties don't know much about. Why? Because no body really teaches it. In school we are taught history, math, and how to write an essay, yet somehow basic money management is skipped over in lieu of learning how to dissect a frog.
So what happens?
Well, we grow up and watch how our parents handle money (whether they are good at it or not) and most of us just copy that. We learn from our parents who learned from their parents, who learned from their parents and so on and so forth. The problem with this system is that nobody is taught in the first place how to manage money. Every "parent" that is learning from figured it out about the time you are trying to figure it out, in their twenties. Sure there are exceptions, where parents were extremely smart with money and taught their kids that, or the opposite, they were extremely bad and the kids learned what not to do. But sadly most people don't live that way. Most people typically live in debt, with no budget in place, spending all of what they are making with no plans for the future.
So we learn that growing up and start that same system the moment we get a job or some money. Unless you were blessed with the 1 in 3 American home that keeps a budget, you've pretty much been in trouble since the get go.
All that to say that learning how to budget and keep a budget is not something that comes naturally to us. In fact it's so not normal that we start to think that it doesn't matter, or that it is not necessary. When in fact we couldn't be more wrong.
Learning how to make and keep a budget is the most important thing you should learn in your twenties.
Now let me tell you three reasons why..
Three Reasons Why You Need To Learn How To Budget In Your Twenties
ONE // FREEDOM
If you don't budget your money, you are a slave to your income.
My favorite reason, and why I'm so passionate about budgeting (and just living on less in general) is because of the freedom it gives. I feel like it is a common myth that when you budget it's like when you are on a diet, you can't do anything fun and you basically just pay bills all day everyday.
While there may be a season of your budget where that has to happen for a little bit, (in order to get out of debt) that is not what a budget does. A budget allows you to live within your means and save money so that you are not tied to anywhere or anything.
So often I hear or see people in situations that, whether they believe it or not, managing their money with a budget could of got them out of it.
When you don't have a lot of money to your name because you spent it all, you are dependent upon the circumstances around you. You are dependent on that job you hate to pay you. You are dependent on that raise every year. You are dependent on the relationship that is supporting you, if you can't support yourself. You are dependent on your car not breaking down every single day, because there is no money to fix it if it does. The same goes for your body and health!
You are dependent on outside forces keeping your life stable and not independent yourself.
Having a budget gives you the opportunity to choose your job, your relationships, pay for that car, be prepared in emergencies and choose the life you want!
Having a budget gives you freedom!
TWO // BACK UP PLAN
Having a budget allows you to take risk free risks.
For all of you adventurous spirits out there that just rolled their eyes at having a back up plan. Hear me out. It isn't that bad.
Though you might have fun flying by the seat of your pants and jumping at opportunities like a cat with a string, it's not fun watching those opportunities crash and burn or coming back to reality after those adventures and having a large bill to pay for it.
Having a budget allows you to know exactly what money is coming in and what money is going out every month. This allows you to know exactly what you have going on financially wise at the drop of a hat. There is no guessing, or just checking the bank account for "what you have left until payday", you know where you are at, at any given moment.
This allows you to know when to say yes to opportunities or things that come your way and more importantly it allows you to know when to say, "No."
Having a back up plan does not mean you are not a risk taker, or you're scared of failing. Having a back up plan means that you care about your life enough to make sure that if something happens you are taken care of.
It's like riding a bike with a helmet. Most people wouldn't ride their bike without a helmet because even though they might not fall and hit their head, if they did the consequences are high enough that they would rather just wear the helmet to be safe. They are technically still taking a risk riding a bike where at any moment they can fall and get hurt, but they are protecting the most important thing, their head.
Think of having a budget and savings as a helmet, a back up plan if your business plan falls through, or you end up having to have some kind of surgery, or you just loose your job and need to pay bills before you find your next one! These are things that happen everyday to people and the ones who are not prepared are the ones it hits the hardest (and who have to move back in with their parents).
No matter how high or low your income is, having a back up plan because you have a budget and savings is the smartest and most important thing to start in your twenties!
THREE // FUTURE INVESTING
I'm not talking about the stock market. I'm talking about your life.
Some people think they don't need to budget or save money because they make enough money to pay all their bills every month and have plenty left over. Why would they need to save any?
Simple answer: Because you can't tell the future.
You can't depend on your job. Your parents. Your significant other. Your car. The housing market. Your rental home. Your pay. Your raise. The stock market. The economy. The price of your groceries or electric bill.
You can't depend on anything outside of you and the money that is already in your hand.
The money you have today, could be taken away tomorrow. You could loose your job. You could easily get sick and have medical bills to pay. You could total your car and have to pay for a new one. (Along with a higher insurance premium because you got in an accident.) There a million different things that could change your situation in life real fast.
Having a budget that puts away money every single month allows you to be prepared for anything! It also allows you to be able to do fun things as well, like go on a trip without using a credit card, or in our case, be able to actually put a down payment down on a house someday!
When having a budget in your twenties you have to say a hard no to a lot of things in order to eventually say an easy yes, to what is most important. That is why having a budget and investing in your future is the smartest choice to make with your money in your twenties, when you are essentially just starting out.
"YOLO" only takes you so far in your finances and is not really a way to live.
Phew! I hope you read through that and felt empowered and not drained! It really is a lifestyle change if you've never learned how or why do it, but it is the best change and thing you should learn in this decade of your life. If you don't, I can guarantee you'll have problems in the decades to follow.
As always, I'm cheering you on tribe!