5 Financial Tips for 20 Something’s

by Fox Symes on April 22, 2014

If you’re in your 20s, chances are you’re interested in getting the most out of life right? Maybe you want to start or do more travelling? Maybe you’re career-focussed? Maybe you just want to have fun and enjoy your personal freedom and independence? Whatever your choices are, great, just make sure you don’t compromise the choices available to you in the future by spending too much and racking up credit now. If you can follow the five tips below, you’ll have a smoother ride financially now and later in life.

1. Create and stick to a budget

It might be Financial Sense 101, but it’s the area where most people fall down. Creating a budget is relatively simple and there are so many online tools and apps to help you on your way. The real test is sticking to your budget. One of the big downfalls for 20s something’s is socialising. It’s so easy to be convinced to stay for “just another drink” and before you know it, you’ve spend a couple of hundred bucks on a big night out. If this is a financial pitfall for you, you need to find ways to manage it and take control of your spending.

2. Stay at home as long as possible

If you get on well with your folks and they’re happy to have you still at home, do so. Many property markets in Australia are over-inflated, which means a large chunk of your pay will go to rent. In the future, this also means you’ll need a much greater deposit and bigger mortgage to buy your own place. The more money you can save by staying at home will set you up for life.

3. Avoid credit & living beyond your means

Credit cards can be very dangerous. Most cards offer 55 days interest free from the time you make each individual purchase. However, most people only pay off the minimum monthly amount or slightly above it. If you are operating your credit card in this way and still making additional purchases, you will find it progressively harder to ever get on top of the debt. It also means, you’re living beyond your means and it’s probably time to figure out how to take control of your own ‘credit crunch’.

4. Don’t travel until you can afford to

One of the biggest financial mistakes people can make is taking a holiday on credit. Why spend money on relaxing and having fun only to come home to even more financial obligations and pressure? Be sensible and practice a bit of patience by holding off on travel plans until you’ve got the savings to do so or go on a working holiday instead.

5. Have a savings plan and rough idea of financial goals

By international and particularly Asian standards, Australians are poor savers. While it was once the norm to ‘save for a rainy day’, today’s society is focused on consumerism and lifestyles that are unobtainable for most of us. Saving 10% of your income is a healthy starting point and once you see your balance grow, you’ll be encouraged to save even more. As you near your 30s, your priorities, directions and goals in life will start to change. This is when you’ll turn to your savings to help you towards the next chapter in your life, such as starting your own business or having children.

With adulthood comes incredible independence, but also responsibility. When you’re in your 20s, it seems like you’ve got the rest of your life ahead of you, and you do. The question is: what kind of life do you want for yourself and can you afford it?

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