A person in their early-to-mid 20s has just started or is interviewing for their first “real” job. For individuals in this situation, you have one massive advantage on your side. TIME. Below is my advice.
Deciding to limit lifestyle inflation before you make decent money will set you up for financial success in the future. Still spending money on the things that are important to you, but do it in a very intentional way.
Automating your finances can be a substitute for a budget if done right. This approach will require more self-discipline, so you’ll have to know yourself before going this route. Having a little money in savings will help when you spend more than anticipated.
If your company does not offer a 401(k), pension, or another related account, consider putting money into an individual retirement account (IRA). Get started even if you can only invest $25 a month. Getting started will put you in the habit of investing to hopefully increase your contributions as you reduce debt or increase income.
The important point is even if you aren’t paying debt immediately, do your best to set the foundation so you can increase the gap between income and payments as your income increases.
The good news is you have time on your side. Set a strong financial foundation now! Make a promise to yourself to keep lifestyle inflation low if your income increases in the future. Automate your finances, so you don’t ever see the money to savings or monthly payments.