Budgeting your way to financial stability | Daily News

Budgeting your way to financial stability

Balancing finances and social life may be a juggling act for many young adults in their early 20s. First and foremost, all young adults must be thinking: in order to balance finances, shouldn't we have an income?

Financial Freedom

In this fast-moving society, many young adults are at least engaged in freelance opportunities. Yet, we see that another half of the crowd are still dependent on their parents. Through these words, I encourage youth to start contributing to the workforce. There might be personal reasons for each individual to either start or not start working.

Some young adults start working as a means of becoming a helping hand for family finances, while others start working as they get an opportunity to accomplish their dreams or goals. Some are extremely bored with the monotonous lifestyles and start thinking of trying out something different, and some feel it as an opportunity to appear financially independent—the list goes on.

Another set of young adults, mostly in Sri Lanka, do not tend to enter the workforce until they complete their higher education. For a certain group, it is acceptable because there is a huge load of the subject content that they need to grasp, and working might erase all mental peace. However, another group is extremely lazy and lethargic; they put forward higher education as a reason to avoid working. In addition, in Sri Lanka, we find undergraduates, mostly in State Universities, who choose to work in order to cover up their expenses.

Higher Studies vs. Career

I hypothetically assume that you have started to earn by yourself and become financially independent by at least starting a group class teaching kids. I find myself with great pride because I started entering the workforce at the age of 19, which was a topic of discussion among my peers, as well as my family members.

In my case, it was totally my own need and passion to pursue a career. I am fond of reading and writing and thus, journalism was one of the top selections in my life. I was confident about myself to the extent where I sought a job without any higher education qualifications (although now I am pursuing my higher education at a State University). I believe we must cultivate that quality in young adults in Sri Lanka.

Many expect to complete higher education, and if they miss the chance to enter university, they tend to give up on life and continue the rest of their lives thinking that they are losers. However, it is positive to see that now, there is a trend among youth to get into some sort of business, even dropshipping.

Monthly Budget

Back to our main topic: how to balance finances in your 20s. Your early twenties are a time for personal development. New towns, new pals, and new jobs. But, with so many firsts, it's only natural to make blunders.

Financial blunders, on the other hand, may be catastrophic. The route to financial stability in your twenties might be arduous. As a result, financial planning as a young adult can help you prepare for life's financial trials and tribulations. You don't need to know everything, but the basics will give you a good start.

Create and stick to a monthly budget. Calculate your monthly income, choose a budgeting strategy, and track your performance. You may make the required changes to have better control over your spending patterns after you have a bird's-eye perspective of how you use your monthly income.

Knowing where your money goes each day, week, and month is a crucial foundation for a financial plan. Keep track of what you do: credit and debit cards might help you calculate this, but in Sri Lanka, we are mainly into using cash. Nevertheless, at least try to manually insert your expenditures and track where your hard-earned money goes.

The 50/30/20 Method

Money-conscious people who wish to connect their savings objectives with their spending patterns adopt the 50/30/20 guideline. The budgeting system works by pooling your income into three separate categories: essentials, wants, and savings.

Fifty percent of your money will go toward essentials, which include monthly payments and costs like housing, bills, food, and transportation. Thirty percent is then allocated to monthly desires. For example, anything special that you would like to eat or you may dine out, spent on hobbies or for travel adventures. Finally, set aside the final 20% of your income for savings.

Know your worth and job scope and then get paid accordingly. Make sure you understand the market value of your position by completing an appraisal of your abilities, productivity, job duties, contribution to the organization, and the going rate for what you do, both inside and outside the company.

Diversifying Income Sources

Diversify your sources of income. Working a 9-5 job for 50 years in the expectation of earning enough money for retirement is soon becoming a thing of the past.To take control of their professions and financial prospects, younger generations are turning to freelancing and entrepreneurship. This trend has made it easier to establish numerous revenue streams by allowing you to develop a portfolio of diverse clients to work with or earn passive income.

The lives presented by celebrities on social media might make you wonder what you're doing amiss with your life. It's difficult to watch individuals your age cruising about in luxurious cars, flashing their costly clothing and jewelry. Try not to be fooled by these facades, however tough it may be.

Many of today's influencers are renting properties and vehicles in order to portray a lifestyle that they themselves cannot maintain. Trying to live up to an unrealistic lifestyle with your money will rapidly put you in debt. You don't have to completely abandon social media; simply try to focus less on what you don't have and more on what you do have.

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