5 Smart money moves to make in your twenties

Financial literacy is an essential aspect of your life. There are multiple books, podcasts and videos that discuss the importance of personal finance and making the right decisions when it comes to money. Learning how to handle your money when you’re still in your twenties is the best way to set yourself up for success. Your twenties are when you enter adulthood and tick off many milestones. You’ve graduated and finally landed a job that will kickstart your career, you’re considering moving out, and you’re seeing the perks of having your own set of wheels.

This time in your life brings many changes, which can be exciting but also costly. Without personal finance goals, you may find yourself living a lifestyle that doesn’t fit your means at this point in your life. This can result in debt and feelings of unhappiness and stress. So, we’ve compiled tips to help you financially navigate this new stage of your life.

Familiarise yourself with budgeting

Creating and sticking to your budget is one of the best financial aid tips for college students entering the labour market. With your new entry-level salary, you want to stretch it enough so that you can be able to do what makes you happy. That can be travelling, moving out of your parents’ house or purchasing your first car. Without a budget, you will find yourself spending money on items you don’t need, putting your dreams and aspirations on the back burner because of instant gratification such as purchasing from an online sale. Instead, you want to budget for everything you buy and make sure that your purchases bring you one step closer to your financial goals. You can choose between many budgeting methods designed to help you keep track and manage your finances in your 20s.

Start saving

Saving is one of the financial goals that most people struggle with. This is not because they don’t know how to save, but because they either save far more than they can afford or far less. To see what you’re doing with your money, you need to have some of that money saved up. This may be for long-term savings such as an emergency fund or retirement, or smaller savings like a car deposit and saving up for a vacation. Saving your money each month helps you achieve many goals without landing yourself in debt. Having savings can help you when you lose your job, have a medical emergency, and ensure you live comfortably when you’re retired. But, for you to save successfully, you need to;

• Use a separate bank account.
• Automate your savings.
• Cut back on spending so you can have more money to save.
• Learn to always pay yourself first before anything else.
• Set saving goals to help motivate you.
• Know what you’re saving for, as this helps you stick to it.

Buy a second-hand car

While a vehicle isn’t the best income-generating asset, it is convenient to have. It’s a safe alternative to public transportation, saves time, and offers you independence and freedom. However, as convenient as it may be, it does not justify you purchasing a brand new car on an entry-level salary. Vehicles are a costly expense even after they’ve been purchased. This is why it’s best to buy a second-hand car – it’s an affordable option, and with such a large market, you’re guaranteed to find a vehicle that is in good condition. You can even apply for graduate finance when seeking a car.

Graduate finance is a tailored finance solution for recent graduates, where credit history is not essential. Lenders understand that most recent graduates are only entering the job market and don’t have an active credit report. By applying for graduate car finance, you can buy an affordable car and get tailored interest rates that are affordable for you. This helps ensure that the vehicle you’re buying isn’t going to put you in a difficult financial position. Plus, you’re able to build a credit score with your car loan, helping you in the future should you need a personal loan or a home loan.

Build a good credit score

Using credit wisely is an effective way of improving your credit rating and helping you get favourable interest rates and payment terms. Of course, getting pre-selected for graduate finance will help you build your credit score, but only when done correctly. This means you have to:

• Ensure you make your payments on time.
• Stick to the payment arrangement (don’t pay less than the agreed amount).
• Open up more lines of credit, but only when you need to.
• Keep your balances low.
• Keep track of your credit score and dispute any incorrect information.

By doing this, you’ll ensure you improve your credit report and show that you are a low-risk borrower in the future, which will help you reach your financial goals. This may be starting a new business, purchasing property or needing a new car.

Figure out how to live within your means

The fifth tip is figuring out how to live within your means. Most people do not know how, which is why so many people find themselves in debt. Your twenties are the perfect time to figure yourself out and make better decisions. Get into the habit of checking and tweaking your budget, finding ways to save more money, not being impulsive when spending money on entertainment, and always asking yourself if what you’re purchasing is a necessity and if it will benefit your future. By doing this, you’re slowly getting into the habit of living with your means and ensuring that you aren’t wasting your hard-earned money on things that won’t matter to you in the future.

Final thoughts

Learning better financial moves does not mean you have to deprive yourself of the nice things in life. Nor does it mean you’ll only live a life you’ll enjoy in the future. It simply means spending wisely so that you can enjoy life now and in the future. Don’t be too hard on yourself while you’re finding your way financially.

You will make a few mistakes on the way, but it’s important for you to learn from them and do better. Do not deprive yourself of enjoyment with friends and family just because you’re saving for the future. Life is about balance. Live in the moment and spoil yourself when you can because that will make your road to financial success all the more fulfilling. We hope that these tips will help you make better financial decisions and help you live the life of your choice.