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It’s nearly here. My 30th birthday is looming right around the corner, and by the end of this week, I’m going to be entering a whole new decade.
I always wanted my twenties to be my ‘selfish years’. The years I pursued my passions, explored the world and built a career within an industry I so desperately wanted to be a part of.
The years I went to university, lived with friends, had some incredible professional experiences that will stay with me until I’m old, started businesses, closed down failing pursuits, and set up other businesses.
I’ve bloody loved my twenties, and if I could relive them all over again, I’d do it in a heartbeat.
But as well as having ridiculous amounts of fun, I also learned one hell of a lot.
Once you’re out of school, you quickly realise they don’t teach you much about money, and you need to learn it for yourself – quickly!
That’s why I wanted to put together a little reflection post in honour of my impending 30th birthday on the financial lessons I learnt in my 20s, in the hope that it acts as a useful guide if you’re looking to get a hold on your finances.
1. Everybody needs an emergency fund
I couldn’t start without mentioning my trusty emergency fund now could I?
An emergency fund is a pot of savings you contribute towards so that it’s ready for you in just that – an emergency.
Opinions differ regarding how much you should have in your emergency fund, but as a rule, having enough to cover 3-6 months of your living expenses is a good port of call.
Start by setting yourself a challenge of saving £1000 in your new emergency fund, and go from there.
2. There will always be more money – as long as you’re committed to making it
A lot of money management is to do with your mindset, and the minute I started to realise that there would always be more money, that I could always make more money, things changed for me.
My confidence around money grew, and I was always looking for money making opportunities – most of them, from the comfort of my own home.
Realising you can always make more money through various side hustles or 9-5s will transform your mindset to that of one of abundance/growth, and that will only ever be a good thing.
3. Zero-based budgeting is a God-send
I honestly can’t rave enough about the zero-based budgeting method. With a little consistency and commitment, it’s been the number one way I’ve got a hold of my finances towards the latter part of my 20s, and has allowed me to pay off my credit card debt, cut down on expenses, and ensure I build my savings as quickly as possible.
Instead of having your life being dictated by money – or lack of – start zero-based budgeting as soon as possible, and start dictating where you want your money to go instead.
My printable below should help you track where you want your money to go each month – and also help you identify any areas you can cut back on:
4. You need a credit card for a credit rating, but only put on that which you can afford
It’s a fact of life in the 21st Century: if you have any chance of being approved for a mortgage or large loan, you have to be able to show you have previously managed debt successfully (usually in the form of a credit card).
Yep, even if you are the world’s most financially savvy person, and haven’t ever had to turn to the credit cards, I’m afraid the mortgage lenders would prefer you to use credit.
So, if you’re going to do it, make sure you find a card that works best for you (I recommend a card with a long interest-free payment term), and ideally you’d be in the position to pay off the card in full each month.
My only exception to this would be if you were looking to purchase something large, and would prefer to break down payments into monthly sums, whilst you don’t need to pay interest.
Likewise, paying for larger/electronic/holiday purchases on credit card will offer you an extra line of protection should something go wrong.
Money Saving Expert is my go-to website of choice when looking for a new credit card – and make sure you consider any additional perks the banks might be able to offer you too!
5. Experiences and travel are worth the expense. Every. Damn. Time.
I will never regret spending money on experiences and travel. Items? Probably, but never experiences.
But that’s what’s important to me – find out what truly makes you happy, and make it a non-negotiable to ensure you are able to build it into your life.
Money isn’t solely there to be built up and stored away. Find something you love, and allocate funds to it – after all, all work and no play…
6. Sinking funds are a lifesaver – especially around MOT time
I’m incredibly lucky in that my mom is a real saver, so I had a great role model to learn from.
Growing up, we didn’t have a lot of spare cash – but somehow, we always had enough for the necessities and some treats. Now I’m older, I realise this is because my mom prepared all year-round for them – and I’m subsequently a complete sinking fund convert.
Sinking funds are different to emergency funds in that they are for expenses you know are going to arise, and it just means you’re prepared for it when they do.
I personally have sinking funds for adventures (my favourite one), my car (to cover my annual insurance policy, MOT and service), Christmas and a miscellaneous pot (should the washing machine break down, or we need to call out a plumber).
I cannot tell you how much of a help it is every time I need to pay my insurance policy to be able to pay it all off in one lump sum because I’d budgeted all year for it (and therefore can take advantage of a cheaper annual policy, rather than a monthly policy).
7. Always get paid into your own bank account – and have a ‘get out fund’
Again, this is another one I have my mom to thank for. She’s a big believer in only having a joint bank account with your other half for expenses, and not tying up the rest of your cash.
A huge thing for my mom was always ensuring I had a ‘get out’ pot, so that if I ever needed to leave my partner, for whatever reason, money (or lack of) wouldn’t be a reason to hold me back.
I’m incredibly grateful to have been brought up with this mindset, and whilst my boyfriend and I have a joint account that we both pay an equal amount into each month, my wage is paid into my own account, and the rest is mine to spend (and the rest of his, is his).
8. All that clutter used to be money
For the longest time, I was obsessed with buying stuff. I felt so satisfied when I went shopping, and returned with a boot full of things that – a couple of weeks later – would no longer be used.
However, I stopped the impulse purchasing when I realised that all the clutter that surrounded me used to be hard-earned money, that I’d traded my time to earn.
Now, I get much more satisfaction from using my money to buy experiences, holidays and watch my savings pots grow.
(Don’t get me wrong – I’m still a sucker for an Essie sale or soy candles, but at least I’m now spending money on things I truly love, rather than just chasing the shopping high).
9. Buy cheap buy twice is true where frying pans, luggage and boots are concerned
Some things really are worth spending that little bit more on, and for me, I discovered that frying pans, luggage and boots were all worth spending that little bit more on in my 20s.
My luggage (which I still managed to pick up for £50 in a Debenhams Boxing Day Sale about five years ago) has visited three different continents, and shows no sign of wearing out anytime soon, and my Scoville Neverstick frying pans are just the best things we own. Likewise, Dune is the place to go for smart, heeled boots that will last throughout multiple winters.
10. Always get the most for your money
This sounds daft, but I used to feel that if I bargain-hunted, I’d look cheap. I was so concerned with how I’d look to others, that I was willing to forgo a deal as long as other people noticed.
Nowadays, I couldn’t care less what people think, and I will always look on Facebook Marketplace/charity shops first if I need a new bit of furniture, will only buy Kindle books if they’re on a 99p deal, will forever remain loyal to Aldi/Lidl, and will continue shouting from the rooftops about my love affair with TopCashback.
If you want to start earning cashback on your purchases, sign up to TopCashback here. You’ll receive a free £5 sign up bonus, and you’ll be making money on products you buy in no time.
Disclaimer: I will receive a small commission if you sign up through my link
11. If you don’t ask, you won’t get
I know, it’s awkward. Us Brits are useless at asking for discounts – but it really is true what they say: if you don’t ask, you won’t get.
Trying to negotiate a discount on a product isn’t illegal – and is actually a super-savvy way to make some great savings.
I once secured a £40 discount on a laptop, as I knew I could get that money back via a cashback site if I purchased online.
Alternatively, if you own your own business, try and negotiate with suppliers – I recently got given a 10% discount on my products, because I asked.
The worst that can happen is they might say no…and if they do, so what?
12. Multiple income streams are important
If the last year alone has shown us anything, it’s that we can’t rely on one stream of income.
When redundancies were announced at my place of work, I didn’t feel too panicked thanks to having a number of side hustles already in place as back up.
Whether you are keen to take on a second, part-time role, fancy freelancing, or would like to embark on a matched betting journey, there really is a side hustle out there for everyone.
To start you off, my free ’50 Side Hustles You Can Start Today’ ebook should give you a few ideas:
13. Learn to invest – better returns than a bank account
The interest you accrue from the savings in your bank account are at an all time low. You’d be lucky to get 3% from a savings account – but often, you’re looking at a fraction of this.
And don’t even think about leaving your money in your current account – where interest rates are as low as 0.3%!
With inflation predicted to be at 1.21% in 2021, you’re actually losing money if you leave your cash in your current account.
Instead, once you’ve built up a healthy emergency fund and have a couple of sinking funds in place, take a look at investing.
With investing (be it in a Stocks & Shares ISA, or on a trading platform such as Trading 212), you’re looking at an average return of 7% – which is a huge difference!
Even if you can only afford to invest £10 a month, start today. It gets you in good habits, will help build your financial confidence, and within a year, you’ll have £120 in there (not to mention the interest you’ll have earned on top).
If you sign up to Trading 212 using my link here, you’ll receive a free share worth up to £100 within three business days when you deposit £1. Your free share can be sold immediately, or you can keep it in your portfolio and see how it performs for you in the long term.
Disclaimer: I’ll also receive a randomly-selected free share if you sign up using my link.
14. Opt in to every pension going
Back in my early 20s, it wasn’t compulsory for workplaces to offer pensions – so I didn’t sign up to one. Add to that a few freelance positions – and the arrogance of youth – and a pension scheme was the last thing on my mind (much to the disappointment of my parents!)
Instead, it was only when I reached 25 that I was enrolled on a workplace pension scheme, and with dreams to retire young, I know I need to ramp up my saving efforts.
Alongside my workplace pension scheme, I also pay into a Lifetime ISA. Currently this is being used to save for a house deposit, but once I’ve bought a home, I’ll still be looking to contribute regularly into my Lifetime ISA to access the government’s top-up bonus of 25%, to be accessed once I’ve reached 60+.
I know when you’re in your early 20s it doesn’t feel that important, but it’s so worth making plans and putting systems into place, to protect future-you.
15. Don’t lend more money than you can afford
It’s going to happen – friends and/or family might need some assistance from time to time. And, most probably, you’re going to want to help.
But if you do, make sure you only lend cash you can afford to lose. Whilst most will pay it back as soon as they possibly can, you might not ever see that cash again – and a lot of the time, it isn’t worth losing a relationship over out of sheer desperation.
16. Donate to charity regularly – but be aware you’ll be sponsoring friends too
On a monthly basis, I donate a small amount to a couple of charities close to my heart. If you’re in the position to, it’s something I’d always recommend.
However, you can also guarantee that pretty much every month, one of your friends will be taking part in a charity challenge of some sort, which you’re going to want to sponsor.
That’s why, in addition to my donations, I allow for an average of £20 in my budget to be able to sponsor my friends if they’re raising money for charity that month.
17. Be mindful of lifestyle inflation
When I was 26 I secured a job with a £5,000 wage increase.
And just like that, it was out with the old owned car, and in with the expensive lease. Out with the old phone, and in with the overly expensive phone contract.
Lifestyle inflation is where your spending increases as your income increases – and is a surefire way to still feel broke by the end of the month.
It instead took me starting zero-based budgeting to realise my spending choices were never going to make me wealthy (don’t forget – it’s not just your wage that makes you wealthy, but the way you use it), and something had to change.
Instead, at the end of my car lease and phone contract, I took out a loan to buy a new-to-me car (which costs £50 less per month than my previous lease), and shopped around to find a much better phone at half the cost.
Now I’m much more mindful of my spending choices, and instead only spend as though I’m on a wage half of what it is – with the rest being shipped off to savings.
18. Revolving wardrobes are the one
It’s entirely possible to have a minimalist wardrobe , that seems everchanging, thanks to a revolving mentality where your clothes are concerned.
But what does that mean?
Well, by constantly reviewing your wardrobe, selling clothes you no longer love, and replacing them with garments you find on eBay and in charity shops that suit your style at that current time, it means you can keep your options updated and in line with what you’re into – at a fraction of the cost.
This is perfect for someone like me, who changes their mind constantly about what styles they like.
Apart from plaid shirts. I’ll always have plaid shirts…
19. Some months, you’ll go way off budget. Don’t be too hard on yourself (but have a buffer in place too)
Look, some months, you’re going to be on your A-game.
You’ll be getting a full eight hours sleep each night, drinking 2L of water each day, working out five times a week AND staying on budget.
And then other months, you’ll be doomscrolling until 3am, barely downing a cup of coffee before midday, and you can bet the postman will be sick of delivering sooo many parcels to your house.
But you see, it’s not about being perfect all of the time. It’s about trying, being perfectly imperfect, and setting up processes that – most of the time – work for you.
With this in mind, I’d always recommend building an extra £50 (or so) buffer into you budget if you can afford to, so that if you do have a blip one week, it doesn’t throw you off for the rest of the month.
It also covers you for any unexpected immediate costs, such as a forgotten birthday gift, or an extra tank of petrol you hadn’t previously accounted for.
Just don’t be too hard on yourself if you find yourself breaking the budget one month.
20. YOLO is crap
Ok, it’s technically true – and in many situations, it’s a useful mentality to have.
But when it comes to money, wouldn’t you rather your only chance at life be a little more comfortable because you weren’t stressing over cash, or throw a few extra tops into your shopping cart because, well, YOLO?
Have a ‘YOLO fund’ if you must – or a ‘treat yourself fund’, or ‘adventure fund’ – whatever you want to call it.
Contribute to it each month so you never have to miss out on the things you truly want to go to, but don’t fall into the trap of convincing yourself to buy whatever it is you weren’t even that interested in, before social media or friends told you you needed it, because, well…YOLO.
So there you have it – twenty financial lessons I learnt in my twenties.
There’s a lot to learn when you’re fresh out of education, and whilst you’re adapting to working life and juggling a career with your social life, getting enough exercise in each week, and eating well – not to mention taking some time out for you – it can feel like money is the least of your priorities.
After all, that’s what your overdraft/credit card/store card is for, right?
With only a couple of hours scrolling through Youtube, blog posts and Pinterest, you can set yourself up with enough financial education to ensure your twenties are not only your best years yet, but your most financially savvy too!
Now enjoy this decade – you can bet I wish I could relive it all over again.