Saving money in your twenties can help set you up for financial success in the future. This time offers great responsibility and independence, so having your finances in order is crucial when it comes to achieving your long-term financial goals.
Save little and often
It doesn’t matter how much money you can save every month – if you get into the habit of putting away small amounts of cash often, it can make all the difference.
Firstly, identify your monthly income and work out how much you can comfortably save each month. Then, put this money into a savings account on the day you get paid, setting up a direct debit so you don’t even notice the money leaving your account.
Build a good credit score
Your twenties offer the perfect opportunity for you to build a good credit score. Doing so will allow you to qualify for a range of financial products that you’ll likely need in later life, such as mortgages and credit cards.
The easiest way to give yourself a quick credit boost is by registering to vote. This is because the electoral role can check your identity and see that you live at a set address.
Stop relying on your overdraft
Many people rely on their overdrafts for a little extra money when they need it most. However, regardless of whether you have a 0% overdraft or a regular overdraft, it should still be treated as debt.
You should only use your overdraft when necessary – it’s better to use it as a short-term cash flow rather than funding your online shopping habits.
Be sure to stay within your overdraft limit, too. Otherwise, you could be charged hefty fees which you might struggle to pay off, landing you in even more debt.
Create a budget and stick to it
Making a realistic budget helps you know exactly where your money is going. Analysing your income and working out how much you spend where can help you make the necessary cutbacks to put more money towards your financial goals.
Work out your monthly income, expenses and financial goals and draw up your budget accordingly. Once your budget is set, keep track of your spending to ensure your sticking to it.
Use credit cards, sensibly
When used properly, a credit card can show lenders that you’re a responsible borrower. You’ll gain the chance to build your credit history if you’re able to pay off your credit card each month.
However, if you believe you won’t be able to and you’ll struggle to resist the temptation to splurge, don’t fall into the trap of endless credit card debt.