The beginning of our twenties is when we truly start to understand money. We are no longer dependent on those who look after us. We are starting to pay tax, rent, NI contributions and bills all while trying to save and invest in our futures.
Knowing where to start can be difficult so here are 5 tips to apply to your money life in your twenties.
- Understand your credit then build your credit
It is really important to know the implications of using credit before you venture into using anything on credit. There is no age limit on when you should learn this but the sooner you learn the quicker you can create a sense of financial trust with future borrowers.
Related: 5 Things That Affect Your Credit
- Ask for what you want
We now live in an age where everyone has a degree and a degree is no longer enough to secure the job and the salary you want. As a result of this, it is important to negotiate what you desire once you have shown you are an asset to your environment. It may also be effective to keep your request of a raise to yourself. If everyone is asking, there is less budget for you to get the amount you initially wanted.
- Set goals for your money From a three-bedroom house to matching cars to 100% ownership of 5 properties, if these are some of your desires write them down and start working out how you can get there. Personal finance can be a lot more fun once you put your plans into perspective. Set yourself goals for where you want to be in 5 years and work backwards so you can assess where you need to be in the nearby future and what you can do right now to start making your future happen.
- Don’t live within your means, live below them
The average person tends to budget around what they earn. The key is to assess how much you want to save, what costs are a necessity and then think about the best way to utilise the rest of your money. Always think about your month in advance and question if there are any events you want to attend e.g. a close friends birthday, a catch up with a friend or a business event that is worth the monetary investment.
- Save some, invest some
Saving income is a great place to start when it comes to monetary discipline however at interest rates between 1-3%, investing is a better way to get more for your money. The idea of investing may not initially sound appealing, nevertheless, gaining an understanding of your attitude towards risk and understanding the foundations of investing is a good place to start. Obtaining financial advice is the best thing to do when you want your money to go further. 6 known types of investment funds are:
- Open-Ended Investment Company
- Investment Trust
- Pension Fund
- Hedge Funds
- Exchange Traded Funds
- Funds of Funds
If the above terms are not familiar be sure to stay updated on our website as we break down the investment jargon for you. Until then, make savings goals and get in touch with professionals about ways to make your money work for you.