For many, your twenties are the years in which your finances are the most stretched. You’re probably trying to save for a house, a new car or a trip, as well as trying to keep up appearances at all the social events. But it’s also the time in your life when you should be setting yourself up to be financially secure for years to come.
So how do you balance it all and learn to take control of your finances?
We asked Bessie Hassan, money expert at finder.com.au for her 5 tips on how to get yourself on the road to financial freedom.
Set yourself a budget
This might sound like the most obvious thing to do, but sometimes we go about setting a budget the wrong way. Often people talk about cutting down on what they spend for particular activities such as eating out or social events, when really we should be looking at ways to alter our activities as well as our spend.
For example, you might find that you spend $300 a month on going out with friends. Instead of limiting the number of nights you spend out socialising, just change the activity. Instead of going out to a bar where you could spend upwards of $50 on drinks, why not organise a girls night or a house party at your place, where your friends can BYO a bottle of $20 wine to last the whole night! That way you don’t have to compromise on your lifestyle too much, which makes it much easier to save money.
It’s never too early to start investing
Investing in your twenties might sound boring but it’s one of the best ways to set yourself up for the rest of your life. Many people forget the power of compound interest, but if you decide to start investing money early and regularly, you’ll end up with a lot more money than if you start investing 10 years later. Just remember, the longer your money is sitting there compounding, the more you’ll end up with. Just make sure you do your research and decide on the best investment plan for you.
Turn to tech
In this day and age, managing your finances has never been easier. There are a number of apps such as Pocketbook, TrackMySPEND and MoneyBrilliant that can help you set, plan and track your spending. Not only do these apps help you visualise your expenditure and income but they’re also a great motivational tool that’ll help you keep your savings on track.
Stop relying on the bank of mum and dad
It’s pretty fortunate to have parents to help you out of a jam, but in your 20s don’t set this up as an expectation for yourself and them. Stopping by for a Sunday roast? Great, it’s nice to have a good relationship with your family. Expecting your parents to pay of your hefty credit card? Maybe it’s time to start thinking on how to rely less on your parents and more on yourself.
Don’t be afraid to say no
This is probably one of the hardest things to do during your twenties, but it’s also one of the most important. You’ll want to say yes to everything. Beach weekend getaway? Yes. One more drink? Of course. New pair of boots? Do you even have to ask? But if you don’t really need it, don’t spend your hard earned money on it.
According to finder.com.au research, 82% of Aussies have experienced buyer’s remorse. That’s 6.8 million Australians spending money on things that they don’t actually want, let alone need. Learning to say no will help you to avoid these shopping regrets. If you think you can, hold out for a sale, but if you desperately need that new little black dress right now, look around for a deal or a coupon code to make sure you’re still getting the best savings.
Managing your finances in your twenties is always going to be hard. But a few small changes and sacrifices could mean the difference between being financially secure and still living paycheck to paycheck a few years down the line.