Written by: Ann Lloyd, Student Savings Guide
Your 20s are a time for exploring and identifying what you want in life, but if you don't have a lot of disposable cash, you could find your options limited — especially now, in the wake of an unprecedented pandemic that’s left us all questioning our financial viability. But rest assured, if you don't have much left over after bills and rent, at least you’ve got plenty of company in both your age group and your generation. People tend to earn less in their 20s overall because they are new to the workforce, and both older Gen Z’ers and younger millennials often face high rents and student loan debt.
You might not get much sympathy from members of earlier generations, who accepted being broke or struggling in their 20s as “normal.” But that doesn’t mean you have to accept it. Dozens of helpful options are available now that weren’t there for earlier generations. This is the time to learn how to save up and cut back strategically to create a more stable financial future.
Grab Control of Your Credit
Learn everything you can about how your credit scores are calculated and how you can start to build your credit and raise them. Even if your credit looks like a blasted wasteland of debt and late payments, you can recover. Take it one step at a time: Get caught up on outstanding payments and chip away at that debt. You can follow popular debt-payment strategies like the snowball method; there are many, so choose one that helps you feel like you’re making progress.
Find out what your credit scores are and which score your cards use. Track these scores and your habits closely to see which of your behaviors affect them. Cards may use either the FICO or Vantage scoring systems (and there’s an update to the FICO system in 2020 that will bring it more in line with how Vantage scores are calculated). Look for sites that offer a variety of scores, so you can get a better picture of where you stand.
Also, consider whether you can take advantage of any funds being made available by new assistance programs aimed at relieving some economic burdens of the pandemic and quarantine. In addition to the suspension of interest on student loans and possible financial assistance options available from employers, there might also be help on the way from the federal government’s COVID-19 relief legislation.
Pick Up Additional Training
You don’t have to go back to school to get more degrees, but whenever you can, it’s helpful to pick up some extra skills. This can range from work-related knowledge to general competencies that help in any situation. For example, now that so many companies have switched almost instantaneously to a global working-from-home mode, this might be the time to finally learn coding or other digital capabilities that help you stay relevant.
Or, like a lot of us, you might be feeling at a loss for how to help in a crisis like the one we’re in. In these situations, taking action can have numerous positive effects. For example, you can now find CPR training classes online; those plus first-aid classes could make you feel a lot better about how to handle emergencies.
Read the Fine Print — All of It
Always read the fine print. Even if it’s the most eye-watering legalese you’ve ever seen, get through it. Doing so will allow you to spot policies you don’t want to agree to.
And here’s a new wrinkle: Companies have started planting incentives and tricks in their fine print to get people to read it.
Sometimes, it pays off! NPR reported that one woman won a $10,000 prize by reading the fine print and finding a note to contact the company. Other times, the fine print is not so generous; in that same article, NPR reported that British Wi-fi users inadvertently agreed to perform thousands of hours of community service and, in one case, give up their first-born child.
While that last one wouldn’t hold up in court (even the company admitted it wasn’t enforceable), it illustrates just how weird the fine print can get without people noticing. You don’t want that fine print costing you in the end.
Find a Fixer-Upper
Let’s say you’re lucky enough to have a minimal down payment for a house, or you’re in a region where buying saves you from skyrocketing rents. You could look for a newer house in an HOA-controlled development, but those often come with fees and, in some cases, shoddy construction. If you don’t want a condo, what other options are there?
Strangely, this pandemic could offer some relief: With the Federal Reserve cutting interest rates to 0% in response to the economic slowdown caused by the coronavirus, this could be the perfect time for you to buy a fixer-upper instead. Low interest rates can help you secure an affordable mortgage, especially on a lower-priced, older home.
You also can save by doing renovations yourself. However, be prepared for a new development when renting a dumpster or other equipment: Homeowners have been using their quarantined free time not only to clean and disinfect their homes, but also to clear out the clutter. With curbside delivery and pickup that accommodates social distancing, vendors have seen a surprising uptick in rentals — so you may need to make an appointment or join a waiting list.
In the end, such obstacles will seem minimal compared with the accomplishment of acquiring and transforming a house into your very own home, especially during these times of uncertainty, when safe housing and security feel more important than ever. So study up, dream big, and make your move toward financial viability.
Saving money in your 20s isn’t necessarily a matter of giving up a coffee a day. Instead, it should involve methods of lowering costs and plugging money drains, implemented in a combination and schedule tailored to your lifestyle and its needs. You can do this! Now, go enjoy your coffee.