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Hey! Wouldn’t it be great to rewind the clock back to our 20’s? When we were so full of life and had so much time on our hands? Well, this is also the time when we should be developing good money habits.
In this video, I’ll walk you through 5 financial hacks to do in your 20’s.
Today I’m going to walk you through 5 financial hacks to do in your 20s, to set you up for your 30s and beyond.
Make sure you stay to the end, as I’ll give you a couple of extra hacks, to really amp it up.
Number 1 – Develop a skill. Your 20s should be a period of focusing on what you are good at, not focusing on making money. By this I mean, you need to be thinking in terms of your career, and not just your job.
Let’s face it, not many people fall in love with their first job, or second or even third. But during your 20s, you should be focusing on building marketable skills that has longevity in the following decades.
Oh and don’t be afraid to experiment, as you can afford to take more risks when you’re younger.
Number 2 – Build your income networks. In your 20s, is the best time to start building those income sources, because you have something many people don’t have. And that’s time.
Start by building multiple sources of income, whether that be through your job, a side hustle or two, investing or starting an online business.
The beauty about starting in your 20s is that you can compound over a longer time horizon as well as take on more risk as there is more time for your mistakes to recover.
By this I mean making a budget or a financial plan for your existing money based on your priorities. Make sure to set goals via the SMART principle of (Specific, Measurable, Attainable, Realistic and Timely), e.g you may want to save $100,000 by age 30 in order to buy a house.
To do this, you’ll need to understand your current cash inflows (income) and outflows (expenses). Then you’ll be able to work out how much you have left over each paycycle to work out how long it may take to reach your financial goals.
Number 4 – Avoid bad debt. By this I mean is to avoid debt which leeches money away from you over the long-term.
This includes things such as credit card debt, or interest costs on late fees such your phone plan or utilities. Bad debt differs from good debt which makes money for you, such as a home loan or a margin loan for shares.
Also, having too much bad debt and late fees can be a hit to your credit score, which may severely restrict you from borrowing in the future.
Number 5 – Build an emergency fund. Ah yes, the rainy day fund. Tell me, do you have any savings for emergencies?
Like most of us, I certainly didn’t have enough in my 20s. But this should be a priority.
Ideally you’d be looking at around 6 months of savings to cover your expenses including rent/mortgage, utilities, groceries etc. should some unfortunate event occur such as a job loss or well, emergency occur.
Aim to save at least 10% of each paycycle until you reach that 6 months of expenses before even considering anything else.
Bonus Number 6 – Stay home longer. Everything works through compounding. And the same goes with your saving.
By staying at home with family for a few extra years can minimize those expenses that would otherwise be spent, such as rent for example.
Hey I know this might not be for everyone, but if you can’t move back in with Mum – then at the very least, learn to cook like Mum. You’ll be surprised how much you’ll be able to save by avoiding eating out, oh and it’d be much healthier too!
Bonus Number 7 – Learn to say No. This means that you might have to say no to a purchase you want, or it means saying no to friends who take up too much of your time, it could even be saying to a job that’s not working out for you.
Whatever it is, learning to say no, and applying it in the right way is an invaluable skill not many of us figure out.
There you are everyone, 5 hacks and a couple of bonus ones there for what everyone should be doing in our 20s.
Remember this is when we should be having fun, learning what works and what doesn’t. It’s OK to make mistakes, but realize that the biggest asset anyone has in their 20s, is time. So use it wisely!
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