GUEST POST: How to Be A Savvy Spender in Your Twenties

When I think back to my financial situation in my twenties, the phrase ‘if I only I knew then, what I know now’ sums things up. That first taste of freedom, an income and no real ties left my healthy financial situation, in inexperienced hands, a little unhealthy as I approached my thirties. In fact, I spent most of my twenties repairing the damage of a couple of years of big spending, wrong financial decisions (particularly when it came to cars and car loans!) and fast living. Of course, if I had my time again, perhaps I wouldn’t change a thing, but this guest post certainly sums up the financial things I should have done better, perfectly. 


When you’re young, it’s easy to live life carefree, never thinking about the future.

You assume that you don’t need to worry about things like pensions and savings until later, when you’ve got growing kids and other things to worry about. After all, when you’re in your twenties, you’re still figuring life out, you shouldn’t need to know everything about money, right?

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Although we all make mistakes with cash during our younger years, having a plan in place during these early years can make a world of difference to your future. The more cautious you are with your cash in your twenties, the better off you’ll be as you move forward into your thirties and forties. Here are a few tips to take with you as you move through your younger years.

Control your Spending

The foundation of good financial health will always be responsible and informed spending habits. If you’re unsure how much you should be spending each month, the best thing you can do is get an insight into how much cash you bring in from your job and other sources. Once you know what your income looks like, most experts recommend spending around 50% of your income on the essentials, 20%-30% on savings, and the rest on the things you want.

Tracking your purchases for a month or so will help you to see where you stand today, and where you might need to improve your spending habits. If you discover that you’re spending too much on entertainment or eating out for instance, then you’ll know where you need to cut back.

Save As Much as You Can

While the guidelines above of saving 20-30% might be a good place to start, they won’t be ideal for everyone. Figuring out how much you need to save can be a challenge, particularly when you have a host of expenses competing for the same cash. If you’re worried that your temptations might get the better of you, it might be helpful to directly deposit a portion of your salary into your savings account each month.

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Ideally, your priority when it comes to savings should be to establish an emergency fund that will cover you for up to 6 months of living expenses. This will help if you find yourself in a position without a regular income. Obviously, you won’t be able to create this safety blanket over night, it will take time but stick to it.

Work on your Credit Rating

Your twenties are a great time to really get to work on your credit rating. With a little luck, you should have started building this already. However, don’t worry if you’re just getting started now. Great credit is a powerful tool for your future and something you need to work carefully on going forward. A high credit score will help you to qualify for the best loans and could even assist when you decide to buy a car or house.

Most people assume that they only need to be wary of having a bad credit score but having no score at all can be just as dangerous. Find out where you stand and work your way up from there.

Save for the Future

Saving for retirement might not seem like such a big deal when you’ve got decades to go before you leave the world of work, but it’s important not to overlook the importance of being prepared. The more you save now, the easier it will be to keep yourself in a great position going forward.

With a little luck, your employer will be contributing to your pension too, but that doesn’t mean you shouldn’t put some of your own cash aside for an extra fund. The more you have to fall back on, the better. When dedicating 30% of your income to savings, try putting 10% towards retirement, and 20% towards other things.

Be Cautious with your Cash

Finally, when you’re young, it’s easy to let temptation get the better of you. However, it’s important to be cautious with your spending habits. You don’t have to count every penny, but it’s worth making sure that you’re at least getting the best deal on the things you do buy.

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Before you make any substantial purchases, head online and see whether you can find the item you want for a cheaper price elsewhere. Dedicate yourself to making the most out of coupon and voucher codes and try and hold off on spending until a sale if you can manage it.


Disclosure: This is a collaborative post

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