10 great money habits to start in your twenties

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Your twenties are the perfect time to get into some great money habits that will set you up for life. Some of you might be reading this and thinking it’s time to start getting serious about your finances which is great! Some of you might be reading this thinking your twenties are too young to be worrying about money. But there couldn’t be a better time to start getting financially savvy. With that in mind here are 10 money habits to nail in your twenties.

From the moment I got my first job at 16 and realised that even on minimum wage I was able to save to go on nice holidays I’ve been passionate about getting the most from my money. I’ve always been smart with my money and making it work for me.

I’m always open and honest about my finances and I will say even now at 29 I’m not on a fantastic wage but I have a mortgage, I can save for those Florida holidays I love and on the whole money isn’t really a big worry for me because I’m smart with it. Given that I’m now approaching the end of my twenties I figured I would pass on all the great habits I’ve learnt when it comes to money to help you on your way to being financially savvy.

Educate yourself about personal finance

I will never understand why personal finance isn’t taught in schools. At least the very basics should be covered. Unfortunately it’s not so it’s down to you to make sure you educate yourself properly. Everything I know about finance has come from doing my own research and learning along the way. When you leave school you’re more than likely going to get your first job. That’s a bunch of 16 year olds earning money for the first time when they don’t have the first clue about wages. It’s crazy. If there’s something you don’t understand when it comes to money just ask or research it. Don’t turn a blind eye when it comes to money matters. The more knowledge you have, the better.

In your twenties you need a good solid knowledge of what’s on your wage slip so tax (and your tax code), National Insurance contributions, pension deductions, student loan deductions and any medical schemes run through your company that are deducted from your wage. You also need to know about rent/mortgages, bank accounts and credit scores. So take some time to make sure you’re properly clued up.

Plan for retirement

Retirement is probably the last thing on your mind right now but you need to start planning. From the moment I got my first proper job after uni I’ve made sure I’m paying into a pension. When I started one job I noticed there weren’t any pension deductions on my wage so I questioned why and was told new employees usually didn’t start paying into a pension until they’d been there 6 months. I asked to start paying into one from the next wage. That’s why it’s important to know what’s going on with your wage and understand the importance on paying into a pension as soon as you can.

If possible it doesn’t hurt to set aside your own retirement savings pot either because we all know that when retirement comes that your pension won’t actually be that big. Now is the perfect time to think about the future and have plans in place.

Pay your bills on time

I cannot stress the importance of making sure you pay your bills on time. I know there are situations that occur that are sometimes out of our control but being financially savvy and creating good money habits is about avoiding debt and financial trouble. There are legitimate reasons why you may not be able to pay your bills on time but there are also reasons that just boil down to not making the correct money decisions.

Your bills should come before anything else. That’s why I always recommend paying your bills as soon as you’ve been paid. That way all the important stuff is out of the way and you don’t have to worry about keeping your money back to pay off your bills. Aligning all your bill payment dates is another really handy tip to ensure that your bills are all getting paid on time. Make sure all your bills have the same payment date or are very close together rather than being spread out across the month.

Have savings

I think a lot of people get put off when they see about having savings but hear me out. Having savings isn’t about instantly having thousands of pounds at your disposal. It doesn’t matter how much you can afford to save all that matters is that you are actually saving. So don’t get disheartened thinking you don’t earn enough to start a savings pot because I’m a big believer in no matter what you earn, you can save. If it’s only £1 a week right now then that’s fine. It’s about getting into the habit of saving money because once you can afford to put more away it will seem like a really natural thing to do.

Side hustles are a great way to start building up your savings pot as they’re extra income on top of your job. It’s important to remember that side hustles often take time to build up though and you still have to work hard at them. They aren’t a quick and easy way to get money. If you’ve been considering a side hustle though and have the time to dedicate to one, here are some ideas:

• Create and sell handmade goods
• Design for print-on-demand
• Start a blog or YouTube channel
• Become a tutor
• Uber driver with KJ PCO
• Virtual assistant
• Join the gig economy
• Freelance writer
• Dog walker/pet sitter
• Manage social media accounts

Learn how to budget

The word budgeting can come with a lot of negative feelings. People feel like it implies you can’t afford things. So let me tell you right now you need to get out of that mindset. Living on a budget just means you’re being smart with your money, spending on the essentials and making sure you have money both to save and have fun with. Budgeting is not a dirty word. I mean I’ve created an entire blog off the back of being a small budget bride because of the lack of content out there for brides who don’t want to spend thousands and thousands. Not because I couldn’t save and have a big expensive wedding but because spending that amount of money on one day is not something I want to do.

With that being said budgeting is good for when you really need to make cutbacks as well. I have a bunch of tips on how to live on a tight budget if you’re trying to get your finances back on track.

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Find the balance

When you’ve truly nailed the art of making your money work for you that’s when you can perfect finding the right balance. I’ve always said the last thing I want to do is to work purely to pay my bills. Life has to be about the right balance between paying those bills and still having fun. Once you’ve learnt how to be good with your money and all your bills are being paid on time, you’re debt free and you’re saving some money then it’s time to enjoy life.

My savings go towards holidays and mini breaks because that’s what brings me the most enjoyment, making memories. Sure I’d love a whole new kitchen and bathroom in my house but the ones I’ve got are fine so while they’re not broke I’d rather spend my money on making memories.

Your twenties are the perfect time for finding that great balance between what you have to spend your money on and what you want to spend your money on.

Think about your credit score

Pretty much everything you do when it comes to finances has an effect on your credit score. Miss a mortgage repayment? Your credit score goes down. Take out a phone contract and don’t pay it on time? Your credit score goes down. Credit cards also affect your score but not always negatively. If you take out a credit card and always make the repayments on time then it can actually give your credit score a boost.

Having a good credit score determines whether a bank will give you a mortgage or a loan and whether you’ll be allowed a credit card so maintaining a good credit score is actually really important. Credit checks will be carried out when you apply for loans, mortgages and credit card and if there’s any blips on the report than a bank may deny your application.

One thing you shouldn’t worry about when it comes to your credit score is a student loan. Even if you’re not currently repaying it, it won’t effect your score.

Don’t take out loans

This is a real big bug bare of mine but I cannot understand people in their twenties who take out loans for material goods. I’ve always been of the mind that if I can’t afford it outright I don’t get. Taking out a loan is a quick fix that teaches you all the wrong things. You haven’t had to save then you run the risk of not being able to pay back the loan. I’m not saying you shouldn’t ever take out a loan as long as you know you can make the repayments but just think about what you’re taking the loan out for.

Going back to weddings, I know taking out a loan for a wedding is quite popular and to be quite honest I couldn’t think of anything more stupid just for one day. Imagine starting out your married life in debt. No thanks.

Get into the mindset of if you want material things you should save for them. Try and avoid loans at all costs and exercise caution when it comes to getting things on contract or on finance too.

Have multiple bank accounts

Having multiple bank accounts is essential for separating your money according to the different things it will be used for. At a minimum you should have two bank accounts. One you use for spending and one you use for saving. Try and spend and save from one account will never work. You should move money into your savings account once you’ve paid all your bills for the month.

If you’re serious about separating your money too then try only taking your spending card out with you and leave your savings card at home. That way you’re not tempted to dip into your savings for impulse buys.

Set yourself goals

Having clear goals is a great way to get financially motivated. Your goals are personal to you and what you want. So don’t worry about them looking like someone else’s. Once you have your goals then you can set about working out how to achieve them. If you’re saving for something specific you can work out how to go about saving and how much you’ll need to put away each month. If you’re working on becoming debt free then you can get a solid plan in place for who you owe money too and how you’ll pay it back.

You should set yourself goals for big and small things because once you see your money working for you, you’ll be more motivated to carry on.

So there you go, 10 great money habits you need to start in your twenties. Getting into good financial habits in your twenties will set you up for life.

Do you have any good money habits you started in your twenties? Share them in the comments.

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