Start Small, Be Consistent: 7 Expert Tips To Help You Manage Money In Your 20s

Your 20s are arguably one of the most exciting decades of your life. You step out into the real world, get gainfully employed, earn ~actual~ money and get to make decisions about your own life! Not all those decisions are going to be wise (remember that one week when you ate pizza for all three meals just because you could?), but when it comes to your finances, it’s important that you have enough knowledge to manage your money well. Trust us, your future self will thank you!

While it may seem tempting to blow off an entire pay cheque on an expensive handbag or the latest iPhone, we urge you to put your credit card down. POPxo caught up with Lavanya Mohan, a chartered accountant, writer and content specialist, for money-management tips for 20-somethings. If you master these seven money habits in your 20s, you’ll be paving the way for a financially secure future.

Save Minimum 20%, But Aim For 30%

We get it, your first few years as a financially-independent adult are exciting! You no longer need to beg your mother to take you shopping or convince your father to buy an extra scoop of ice cream. But a wise man once said “With great power comes great responsibility”, and we’re pretty sure he was talking about money (and definitely not about saving lives as the friendly neighbourhood Spiderman). So resist the urge to blow up your entire paycheque, and set some money aside for your savings. “Aim to save a minimum of 20% of your net pay, that is, the amount of money that gets credited in your bank account after taxes. 20% is the minimum! Start with 20% and move up to 30%,” advises Lavanya.

Learn How To Budget

This might sound like a tough task, but we swear it’s easier than you think! According to Lavanya, a budget is literally just a plan that estimates your expenses for the month/week ahead. “Having a plan allows you to stay on track with your goals. It’s kind of like going shopping with a list (versus without). When you have a list or a plan ahead of time, it’s likely that you’re going to stick to it!” she says. And if spreadsheets give you a headache, Lavanya suggests downloading a budgeting app on your phone.

Save Before You Spend

Every twenty-something has made the rookie financial mistake of saving ‘whatever is left at the end of this month’ at some point. But just like your bills, you should also be ‘paying’ yourself first before you proceed to spend the rest of your money. “Don’t let your savings be something that happens after you spend. Instead, make savings a habit right at the start of the month. This way, your savings are out of the way and you’re not stressed out about saving as the month comes to an end,” says Lavanya. And who doesn’t like the idea of their bank balance growing over time?

Identify Low Spend Months

Some months are easier on your wallet, and you should take advantage of that! “Consider this the money version of fasting!” says Lavanya. Her advice: identify low/no spend months where you actively avoid extra expenses. Be smart about how you identify these months–your birthday month, for example, cannot be a no-buy month. Neither can the months which have the major festivals that you celebrate. “And when I say no-spend, food and utilities are obvious exemptions, but these months are basically you not spending on clothes, skincare and other extras. You’ll be shocked at the extra amount you save!” she adds.

Set Aside “Money Time”

It’s like a date, only with your finances! Lavanya suggests you set aside 45 minutes on your calendar every week where you (and your partner) will take the time to go through your bank accounts, whatever you’ve swiped your card on and take stock for the week ahead. “This is basically dedicated time to discuss everything from your future plans to grocery bills, all from the perspective of money. Make this a habit!” she says.

Set Up An Emergency Fund

Sure, it’s amazing that you’ve deiced to set aside money to buy that gorgeous pair of luxury shoes. But Lavanya urges you to dedicate some energy (and money) to a more important fund. “Make 2021 the year you have a ‘when shit hits the fan’ savings fund. By now, we are all familiar with the ways the world–and our lives–can change overnight. So take the time to build an emergency fund, which ideally has 3 months of your pay. It can take you around 6-8 months to build it, which is why you need to arrive at a strategy now,” she says.

7. Don’t Fall Into The EMI Trap

“Treat yo self” is a millennial mantra, and even financial experts don’t have objections to the sentiment–save one. Don’t buy something with money you don’t have. Lavanya suggests you save for it instead. “It’s been a rough year and of course, you should treat yourself to something special. But if you want an expensive item, plan ahead and save for it in a structured and intentional way instead of falling into the EMI trap. It may feel like the easy way out but it can cost you in ways you could’ve never imagined. Besides, the effort of saving makes the purchase that much sweeter!” she says.

Managing your money in your 20s might sound like a daunting task, but start small and be consistent–you’ll get the hang of it eventually!

Featured Image: Pexels