There’s no doubt that your 20s are an exciting time of your life. It’s during these few years that you start earning your keep, embark on unforgettable adventures, experience life-changing events, and make major decisions.
Most of us have lots of exciting plans on our bucket list – skydiving, road tripping, flying first-class, among others. What’s holding us back may likely be the lack of resources to check these items off. One way to overcome that is to keep your finances in good shape so that you can live each day to the fullest without worrying more than you should about money.
Wondering if there are any life hacks to manage your money better during these golden years? Here are 7 money tips to help you thrive!
1. Be financially independent – having monthly, quarterly, yearly budgets
Most people enter the working world and get their first paycheck in their 20s. Standing on your own two feet after receiving pocket money for years can feel liberating.
Before you treat yo’self for working hard, remember to record your spending in monthly, quarterly, and yearly budget trackers, and review them regularly to identify any spending triggers. Having a budget helps you to spend within your means and build a saving habit. This is especially important in an age where payment is belated and things are easily charged to credit cards.
Want to start budgeting? Check out our free excel budget tracker.
2. Set up an emergency fund
When you’re having fun, it’s easy to put on rose-tinted glasses and envision a life that’s free from financial stress. However, it’s also key to be prepared for rainy days – facing unexpected expenditures that could leave a dent in your bank account.
Having an emergency fund “shock-proofs” your life as much as possible, making you ever-ready whenever those expenses come knocking on your door. We don’t just mean unpleasant occurrences such as retrenchment or an accident, but also joyous ones such as an unexpected relocation to a country you’ve always wanted to go to. As the award-winning financial writer, Morgan Housel advises, it’s prudent to save for expenses you can’t even imagine.
3. Save for retirement
When you think about retiring, do you think of years and years down the road, when you have greying hair? Many choose to live in the moment rather than think about the future. But if you plan your retirement well and early, you may be able to graduate from the workforce earlier than your peers, fulfilling your dream of travelling the world or exploring a different passion.
To live your best life even in your later years, it’s never too early to start designing your perfect retirement. After putting money aside for the necessary expenses each month, allocate a fixed amount to your retirement fund before spending the rest.
4. Maintain a good credit history and score
We’ve all gotten report cards in school. Imagine getting it from the bank, with your score based on how punctually you repaid your loans in the past. That’s your credit history.
Your credit score is then used by lenders as an assessment of how likely you are to repay your loans in the future.
While that may sound intimidating, keeping your score healthy is easier than you think. For example, you can chalk up a great score by clearing your dues on time, using your credit cards as a payment method (instead of an ATM or money lender), and minimising the number of lenders you borrow from.
And don’t forget to steer clear of making multiple loan inquiries in a short time window. That could make you look “credit hungry”, and misidentified as a person in dire financial straits!
A good credit score will open many doors. When the bank or financial institution recognises you as a responsible borrower, you’d be able to get a bigger loan when you need it, and more speedily too.
5. Firm up plans on clearing your debt
On the topic of credit score and dues, be sure to put in place realistic and sturdy plans to clear your debts. For example, aim to clear your university loan 5 years after graduation. Took out a car, house, or renovation loan? Factor them in when drafting up your monthly and quarterly budget trackers, so you’re always on top of your repayment plan.
For more tips on clearing debt stress-free, check out our article here.
6. Get covered with a customised insurance portfolio
Been thinking about how the important things and people in your life need more safeguarding through the flurry of life changes? The best way to achieve peace of mind is to be prepared. Good insurance coverage gives you just that.
Your insurance portfolio is as unique as your personality, life choices, and goals. Plans that are too affordable may not provide sufficient coverage. At the same time, plans that are overly comprehensive are not only steeper in price, but may offer more than what your lifestyle requires. Identify your priorities in life and seek an insurance portfolio that suits you best.
7. Start investing
As the investing magnate, Warren Buffet, famously said “Successful investing takes time, discipline, and patience.” Consider starting investing in your 20s if you have not.
When you invest early, you have more time to accrue your earnings and ride the dips in the market. All forms of investment carry risk, but with prudent management and time in the market, it’s possible to reap rewards.
When you invest in Earn+, you can supercharge your idle cash to earn an estimated 2 to 2.5% interest p.a*, perfect for saving up for short-to-medium term goals. Your investment is in good hands too – looked after by best-in-class asset management partners, Fullerton Fund Management and UOB Asset Management Ltd.
*Projected yield and returns are not guaranteed or protected. Please refer to the latest projected yield and returns.