The Personal Finance Moves to Make in Your 20s and The Ones Not to Worry About

Personal finance moves to make in your 20s

As I approach the end of my 20s (I still can’t really believe it myself), I am taking stock of the various financial milestones that are important at this stage in my life. Today I am breaking down the money moves you should make while in your 20s and the ones you shouldn’t worry about.

Personal Finance Moves to Make in Your 20s

#1 – Contribute to a pension

As early as possible in your 20s you should start a pension. Retirement might seem like a lifetime away but the time horizon of your investment is a critical factor in getting the best return. Start a pension as soon as you start working. If your employer offers a pension contribution as part of your employment package make sure you maximise the potential contribution – it’s literally free money.  You can read more on Pensions and find some useful resources here.

#2 – Be a regular saver

There is no magic number you should have saved by the time you are 30. What is important, is that you have established a habit of saving money every time that you get paid. That you have the discipline needed to put aside money on a regular basis and not to dip into it.

#3 – Have a budget

The third essential money move you need to make in your 20s is that you set and stick to a budget. A budget needs to be written down (either on paper or electronically) and should be reviewed and updated regularly. Your budget is your spending and savings plan rolled into one and it reflects how you ACTUALLY spend your money. To some people budgeting can sound restrictive, but for me it is completely freeing. Read about why I budget here.

#4 – Know your numbers

You should know how much you earn, spend and save. And you know what your bills are, when they are due and how much they are for. You need to know what % of your income you save and what % of your income you spend each month.

#5 – Learn how to say ‘No’

You are no longer giving into peer pressure or saying ‘yes’ to things when you really mean no. You have learned how to (politely) say no to things that you don’t want to partake in or spend money on. And, for extra bonus points, you don’t feel guilty about it.

#6 – Have a monthly Personal Finance routine

Have a checklist of Personal Finance related tasks that you perform monthly. This way you will keep on top of your finances and you won’t forget anything important. Make sure you put time in the diary to complete the checklist to make sure it actually happens. These could be things like making sure all your bills were debited from your account, updating your sinking funds, checking if any of your utility contracts have finished and can now be re-negotiated and paying expenses that only occur annually.

#7 – Have a plan to increase your income

Cutting down on unnecessary expenses, while REALLY important, is often not enough on it’s own to build wealth and help you meeting your financial goals. One of the critical personal finance moves to make in your 20s is to have a plan to increase your income such as preparing yourself for a promotion or make a career shift or set up your own side hustle. Have a plan. If starting a side hustle interests you, I strongly recommend listening to the Side Hustle School podcast.

Personal Finance Moves NOT to Make in Your 20s

#1 – You don’t have to get a mortgage or rent

It might seem like everyone in the world is renting or buying property but it is not something that you need to rush into. Where you live is one of the biggest decisions you will make, take your time in choosing and make sure you can comfortably afford whatever you choose.

#2 – You don’t have to buy into the ‘treat yourself’ mentality

The phrase Treat Yo’self came to popularity through one of my all-time favourite TV shows Parks and Recreation (highly recommend everyone watch it – it’s hilarious!). However don’t use Treat Yo’self as an excuse to blow your money. It can easily lead to unwanted purchases and credit card debt that will last long beyond the thrill you felt when you bought it.

#3 – You don’t have to take a gap year to travel

Travelling and seeing new places holds a lot of value for many people, myself included. I do think it’s important to point out that you can travel and see the world without taking a gap year. As alluring taking time out of work may seem, it is generally unpaid leave. If you use annual leave entitlement wisely, you can still travel and you might even be able to afford to do it in style! 😀

#4 – Get into credit card debt because ‘you only live once’

YOLO is another popular excuse people sometimes use to make purchases or life decisions that can lead you down a difficult path. Don’t fall for this fake self-actualisation. It might be factually correct that you do in fact, only live once but this is not a reason to make poor choices that leave you broke or in debt.

#5 – You don’t have to have your future figured out

Your 20s is an amazing time where you get to figure out who you really are and what you really want from life. That doesn’t mean you need to have all the answers. Use this time to get to know yourself, to grow and to create opportunities for yourself. But don’t buy into the myth that you have to have it all figured out. Remember that comparison is the thief of joy so don’t be worrying about what everyone else is doing. Learn to enjoy the journey!

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