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By Cloe Matheson
Special to the Financial Independence Hub
Your twenties are often touted as the best years of your life. They’re full of fun, frivolity, and finding out who you are. But it’s easy, as a twenty-something, to surrender any thought of saving for your future.
Now, we aren’t saying that every millennial will squander their chance of buying a house because they spend too much money on smashed avocado toast. There are, however, a few key things that we could all do better in our twenties to manage our finances. Want to know how to save your pennies for the future? Here are some top tips.
1.) Don’t get into (more) debt
Most of us will already have large loans to pay back for college. Avoid saddling yourself with even more debt by buying things you can’t afford. This habit will only lead to a world of pain in the next decade of your life.
So how do you avoid getting yourself into financial trouble by spending carelessly? Firstly, evaluate and reflect whenever you look to purchase items over a hundred or so dollars. It’s not only big-ticket purchases you need to watch out for, either. All those discretionary purchases – a top here, a coffee there – really do add up.
2.) Build your credit history
You also need to build up your credit history carefully and surely. For many banks and mortgage brokers, a total lack of debt signals financial immaturity. Start building a solid credit history by making a small purchase on credit (say, a washing machine), and promptly paying the moneylender back.
3.) Learn to live with less
It might take some philosophising, but it’s time to re-evaluate your attitude toward material things. Young people tend to compare their circumstances with their friends’ more than most. There’s also a tendency to covet the gadgets and homes that we see plastered on social media. But you don’t need to live this way to be happy.
Rather than lusting after that million-dollar purchase, investigate cost-effective options which have the potential to make you just as happy. Take housing, for example. Rather than that overpriced mid-city apartment, investigate the option of a tiny home. Shipping containers make great starting structures, both for tiny homes and for pop-up businesses.
4.) Invest in your employability
There are few safety nets in life like a good, marketable skill. Having a valuable skill that you can carry anywhere (or better yet, a whole set of them) gives you long-term security. In this increasingly volatile financial world, security is a treasure.
We know twenty-somethings hate being tied down in the same job too long. Here comes the good news: roving across multiple organisations and industries can actually build up your C.V. in a truly positive way. If you do change jobs a lot, just make sure you work hard, do your best, and make a good impression in every single position.
5.) Take precautions
Ensure you have proper security, should anything adverse happen in your life. There are a couple of precautionary measures no sensible twenty-year-old should skip out on.
Insurance is the first essential. Paying for home and contents, car, and health insurance may seem like a hit to your pocket to start with. However, if your home or car gets burgled or you have a health crisis, you’ll be thanking your lucky stars that you listened to your parents and purchased insurance. The second is building an emergency fund, just in case your insurance doesn’t cover the said event.
Altogether, managing finances in your 20s means not being careless with some of the most active years of your life. Revel in new experiences, work opportunities, and friendships, and don’t get bogged down by trying to keep up with the latest possessions, gadgets, and clothing. Be mindful of everything you spend, and make sure it adds lasting value to your life. Invest money in protecting yourself, furthering your goals, and making sure you’re healthy and fit to enjoy being an amazing 20-something year old.
Cloe Matheson is a freelance writer based in Dunedin, New Zealand who has written a wide range of articles for different sites and businesses. Living on her own has given Cloe newfound appreciation for her parents’ advice – ‘Always save cash for rainy days!’ Read more of Cloe’s work on her blog.
