In this article, I will share What I wish knew about Money in My 20s.
When I was in my 20s, I had no clue what I was doing with money. I spent like there was no tomorrow. I assumed I’d figure it all out eventually.
I thought that credit cards were just free money. But looking back now, I wish someone had sat me down. It would have been helpful to receive a few financial pointers. They could have helped me avoid some major mistakes.
If you’re in your 20s, here’s what I wish I’d known about money back then. Even if you’re not, I hope this helps you build a solid financial foundation for your future.
1. The Power of Budgeting
Let’s start with the basics: budgeting. If you’re like me, you might think of a budget as some kind of boring chore that restricts your fun.
But trust me, learning to budget will make life way less stressful. Without a clear budget, you’re just throwing your money around without any direction.
I learned the hard way that tracking where your money goes is crucial. Start with tracking your income, list out your expenses (rent, groceries, subscriptions, etc.), and set goals.
Get a clear picture of where your money is going. Then you can make informed choices about what to cut. Decide where to allocate more funds.
Peace of mind that comes from knowing precisely what’s happening with your finances is valuable.
2. Saving Early = Big Gains Later
Saving money can feel like a drag when you’re young and living for the weekend. But trust me when I say this: the earlier you start saving, the better.
Even putting away just a small amount can make a huge difference in the long run.
Why? Because of compound interest. Basically, your money earns interest on top of the interest you’ve already earned. It’s like a snowball that just keeps getting bigger and bigger. The sooner you start, the more time your money has to grow.
Set up automatic transfers to a savings account pay yourself first, before you do anything else.
3. Credit Cards: Friend or Foe?
Credit cards get a bad rap, and for good reason. If you’re not careful, they can trap you in a cycle of debt.
But when used responsibly, credit cards can be your financial ally. They can help you build a solid credit score, earn rewards, and even get cashback.
The key is responsibility. Don’t buy things you can’t afford just because you have credit available.
I learned that the hard way. I had a few months of racking up debt. I couldn’t pay it off. Pay your balance in full every month to avoid interest charges. Know the terms of your card, and be smart about how you use it.
You might be interested in reading this article: 5 Hidden Costs Of A Credit Card Debt
4. Avoiding Lifestyle Inflation
This one is sneaky. As you start earning more money, you might fall into the trap of lifestyle inflation. This is the tendency to spend more as your income rises. You get a raise, and suddenly you’re upgrading your car, eating out more, or buying trendy clothes.
But here’s the thing: you don’t have to increase your spending just because your paycheck gets a bump.
Live below your means,(more on this later) and you’ll have more money to save, invest, and use for what truly matters to you.
Small changes, like cooking at home or cutting down on subscription services, can add up quickly.
5. Building an Emergency Fund
Life happens. Cars break down, medical bills pile up, or a job loss might catch you off guard. That’s where an emergency fund comes in.
Having a few months’ worth of expenses saved up in an easily accessible account provides a financial cushion. It helps you weather any unexpected financial storm.
Start small—aim for £500 or £1,000 at first, then work your way up to three to six months’ worth of living expenses.
It’ll take time, but the peace of mind it gives you is priceless.
6. Live Within Your Means
Don’t spend more than you earn, no matter how tempting it may be.
The moment you start relying on credit or taking on debt to fund your lifestyle is the moment you begin digging yourself into a hole.
Being financially responsible isn’t about being super frugal or sacrificing everything you enjoy.
It’s about prioritizing your long-term financial well-being and making conscious choices to avoid living paycheck to paycheck.
If you make saving and investing a priority, you’ll thank yourself in the future.
7. Don’t Live Like the Joneses
It’s easy to see what your friends or social media influencers are doing. You might feel like you should keep up. They’ve got the new car, the fancy vacation, or the latest gadgets. Here’s the truth: you don’t need to live like the Joneses.
We often get caught up in trying to match the spending habits of those around us. However, what’s important is your own financial goals. Their goals are not yours.
Trying to keep up with others can quickly lead to unnecessary spending and debt. Focus on what truly makes you happy, and don’t let social pressures dictate your financial decisions.
8. Educate Yourself About Money
One of the best things you can do in your 20s is educate yourself about money. I can’t tell you how many mistakes I made simply because I didn’t understand how finances worked.
Books, blogs, podcasts, and courses are all great ways to start learning about money.
Some books I wish I’d read sooner include Rich Dad Poor Dad by Robert Kiyosaki, The Total Money Makeover by Dave Ramsey, and The Simple Path to Wealth by JL Collins.
Educating yourself will help you make smarter decisions about budgeting. It will also aid in making smart investment choices. This education will set you up for financial success in the long run.
9. The Mindset Shift: Money Isn’t Everything, But It Does Matter
Lastly, it’s important to shift your mindset around money. Money is not the ultimate goal—living a fulfilling life is.
But money is a tool. It can help you achieve your dreams. It reduces stress. It allows you to live a life of financial freedom.
In your 20s, it’s tempting to think that money doesn’t matter yet. You might also believe it’s just a means to an end.
Develop a healthy relationship with money early. It will be easier to make decisions that align with your values and
Wrapping up
No matter where you are in your financial journey, it’s never too late to start making better money decisions.
Remember, money is a tool, not the goal. By making smart choices today, you’re building the foundation for a life of freedom and financial independence tomorrow.
Have you got any your financial lessons or tips?
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