Personal Finance Basics for my Fellow 20-Somethings

"The Way You Treat $10 is The Way You'll Treat $10,000"
- Tessabella

As you enter your mid-20s, you may be starting to realize that you need to start taking your finances seriously.

Maybe you’ve landed your first “real” job, or you’re starting to think about making big life changes like buying a house or starting a family.

Or maybe… You’re just sick and tired of feeling like you’re on a perpetual money hamster-wheel that you can’t seem to get off.

Whatever your situation looks like right now, it’s important to at least build a foundation of financial knowledge so that you have something to build upon.

For some of you, this may serve as a checklist, that you graze through quickly and all of the sudden feel a solid ego boost as you realize that these are all things you already knew.

And for others, it may serve as a helpful starting point for stepping into your richest era yet!

Before diving into the what of personal finance 101, let’s explore the why!

Why is it so important to understand personal finance basics in your mid-20s?

You’re building habits that will last a lifetime.

Aka, you don’t want to be that person who finds themselves in their mid 40’s or later trying to pick up a new job at the local diner.

Your mid-20s are a time of great change and growth. You’re figuring out who you are, while simultaneously trying to get or keep your sh*t together.

Whether conscious or subconscious, you’re building the habits and routines that will shape your future. By taking the time to learn about personal finance and develop good money habits now, you’ll be setting yourself up for a lifetime of financial success!

“The way you treat $10, is the way you’ll treat $10,000”

You’re starting to earn more money.

Hopefully this is the case for you! If that has not yet begun to happen for you, i’d dare to say you’re at least on the right track.

For many people, their mid-20s are a time when they start earning a real salary for the first time.

This can be both exciting and overwhelming, especially if you’re not used to having that kind of money at your disposal. Understanding personal finance basics will help you make the most of your income, by setting a budget, saving for the future, learning how and what to invest in, etc.

You’re making big financial decisions.

We all have that one friend who bought a house when we were trying to determine if our $1.99 transaction would be declined or not.

Regardless, your mid-20s are also a time when you’re likely to be making some big financial decisions, like buying a car, renting your first apartment, or even purchasing your first home.

These decisions can have a huge impact on your financial future, so it’s important to make them wisely. By understanding personal finance basics, you’ll be better equipped to evaluate your options and make informed decisions.

The 411 on Personal Finance According to Me 💁🏻‍♀️

Though the term self-made millionaire makes me cringe a bit. I did accomplish the feat of making over $1,000,000 by the age of 25, and without anyone to guide me through that journey, I certainly made my fair share of dumb decisions, and foolish mistakes that cost me a lot of time and money. I do want to point out that the things I share online through all of my BillionDollarBella channels, are not just theory rather what has or has not worked for me, and my network.

So what are some of the personal finance basics you should be focusing on in your mid-20s?

Here are a few key areas to consider:

• Income: Understanding how to assess the value of your time, and how much your knowledge and expertise is worth. This typically pertains to your active income.

• Passive Income: Though the term has since become a bit taboo, the concept will never not be awesome. Wether its $5 or $5,000… having a direct deposit hit your account that you didn’t have to do any active work for is awesome. There are ways to build passive income streams, and there are also strategic ways to buy passive income streams. Do not fall into the internet traps that pose as passive income but really mean ‘another job’

• Saving: Start building an emergency fund, and think about saving for long-term goals like retirement or a down payment on a house. How should you calculate your savings percentage? Are you utilizing any other savings vehicles outside of a traditional savings account?

• Investing: Start learning about investing and explore your options for building wealth over the long-term. Investing is also such a broad term and can encompass so many different strategies. Learning more about what you can afford to invest, is essential so that you don’t lose your tail on it. (speaking from experience here)

• Budgeting: Ewww I hate that word! In the world of personal finances there are certainly many mixed emotions around ‘budgeting.’ Regardless of your feelings on it, or how strict of a budget you want to follow, it is essential to learn how to create a budget and track your spending, so you can make the most of your income and avoid debt. Essentially running a P&L (profit and loss) on your life so that you don’t get into a position of spending more than you’re making.

• Credit: Ooooh Baby! Credit excites me more than most things, but was one of the hardest for me to wrap my head around. I took my personal score from a 510 up to a 780 (and growing) and continued to strategically leverage my credit access to build and scale my business. Understanding how credit works, and building a good credit history is essential.

• Taxes: Obviously extremely important to make sure you have all of your respective ducks in a row here. If there is one expense to incur that is more than worth it from day one, it’s a skill tax preparer or advisor. This can be the difference of hundreds of thousands of dollars over time. Learn the basics of tax planning and make sure you’re taking advantage of any tax breaks or deductions you’re entitled to.

By focusing on these areas and building a foundation of financial knowledge, you’ll be setting yourself up for a lifetime of financial success.

So don’t wait — start learning about personal finance today, and give yourself the tools you need to build the future you want.

I feel fortunate to have built my financial foundation over the last 5–7 years, and my mission is truly to show as many people as possible that basics of how to keep yourself in great financial health for life!

It can be one of the number one stressors in many peoples lives, and trust me… I’ve been there!