Guest Post: How to Be More Money-Savvy in Your 20’s and Why It’s a Big Deal

If I could travel back in time I would encourage my 20 y.o. self to begin developing good money habits ASAP. After that, I would shake that "poor student" mentality from my noggin and get a headstart when it comes to saving and investing. Really, when I think of all the crap I accumulated when I started working, I seem to die a little inside. What the hell was I thinking?! So if you're just about to embark on your first job, or are in the middle of it, start  building up these habits right away. You'll be heaps thankful that you did so down the road. Thanks Loren for the great post!

When you’re young and free it’s easy to put off saving something for retirement until later in life, though with retirement ages being pushed back further each year, unless you want to retire in your 70s when you’re likely to be too tired to enjoy your retirement, you need to start putting something away for the future now.

But there’s more involved than simply putting something away for retirement when you’re young – for now anyway – because many twentysomethings incur debts that hobble them for many years, many develop poor spending habits which are difficult to break and many never learn how to budget effectively.

To enjoy a comfortable future you must learn how to be more money-savvy. This is easy to do – albeit initially unappealing for most young people – since you just need to understand a few things about budgeting, saving and spending, and of course put what you’ve learned into action.

Take It Easy On Your Credit Card

Having a credit card and using it regularly and sensibly, is a great way to build up a healthy credit score and access finance on competitive terms later in life.

However, a mistake many twentysomethings make is using their credit card for non-essential purposes on a regular basis, with some applying for more than one card.

Use your credit card sensibly, limit yourself to one card, use it only for essential purposes – the occasional holiday or shopping trip is fine – and make repayments on time – just one missed repayment can negatively impact your credit score.

Grow Your Emergency Fund

Starting an emergency fund early on in life gives you something to fall back on without having to resort to incurring new debt by using your credit card, “Trying to resolve an emergency with a credit card can lead down a dangerous path of debt,” says Jim Wang, blogger at

Although opinions on the subject differ, Wang claims you should have a minimum of six months’ worth expenses set aside in an emergency fund kept separate from your everyday savings account.

Learn How to Budget

Budgeting, or more accurately, an inability to budget, is a big problem for many young people, though budgeting is a skill that will serve you well throughout life and you need to master it early on.
There are a number of budgeting tips to master, including the envelope budgeting method. When saving for something, “Take an envelope, write the name of the purchase on it, and then every week, contribute to the envelope, and when it has enough money, make the purchase,” says Hodgson DuQuesnay, CEO of Ignite Investments and Planning.

Don’t Borrow Unless It’s 100 Percent Necessary

You need to take on some debt to work towards earning a high credit score – “A higher score will get you lower interest rates and lower interest rates can save you hundreds of thousands over your financial lifetime,” says the author of Save Big, Elisabeth Leamy – though you should never incur debt unless it’s 100 percent necessary and it often isn’t.

Start Saving for Your Retirement Now

Earmarking just a small percentage of your earnings for your retirement now can go a long way and the sooner you start the more you’ll save.

Retirement-planning expert Steve Vernon advocates saving 10 percent of your income “no matter how much or how little you make,” because even small amounts add up over time.

Learn About Investing and Get Started ASAP

The investments you decide upon can earn you a little or a lot over time so take an interest in investing and get started ASAP.

While you’re learning about investing it would be wise not to start on the stock market just yet, but rather, put what you plan on investing in a high-returns saving account until you’re in a better position to start making astute investment decisions.

It’s remarkable just how beneficial establishing good budgeting, saving and spending habits early on in life can be. If you’re to enjoy a comfortable life, help your kids with university and have a choice as to when you’ll retire, you need to establish money-savvy habits early on, so get started today.

Author Bio:

Loren Maluenda is from Regus PH, a multinational company offering flexible workspace solution.  They have 1500 business centres in 99 countries.

*Image credits: Cristiano Betta, license Attribution 2.0 Generic (CC BY 2.0)


Florlin said…
I'm still 19, but I really found this helpful. I will really do my best to follow these and start as early as now. Thank you very much! :D
Jillsabs said…
You're welcome Florlin! And congratulations on being financially conscious at such a young age :)

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