Financial tips I wish I had known in my 20s

When you're in your 20s, it feels like the world is at your feet, and if you've just started earning a salary, this world seems like it's more in your grasp. And you can enjoy it more, right? It may seem tempting to always fully embrace the ' YOLO (You Only Live Once)' approach to life. Book the trip, take out more credit to afford the sneakers, get the latest iPhone etc. And while life should be enjoyed, it's easy to forget that the financial decisions we make in our 20s, can and will affect us later in life. 

So, how do you make sure that your financial journey throughout your life is one that helps you build in every decade of your life? Let's dive into that in this blog post. 

Saving for an emergency fund

If you do nothing other than saving money for an emergency fund during your 20s, you would've built a solid long-term habit for your life. 

What is saving for an emergency fund?

An emergency fund is essential for when life's emergencies do arise. Emergencies can include needing new tyres for your car, an unexpected medical emergency if you do not have medical aid, an unexpected tax bill etc. An emergency fund is dedicated for any unexpected expense. It's essential so that you do not take out a loan or rely on your credit card to pay for that emergency. 

With Meerkat you can start saving towards an emergency fund with as little as R25 per month. You also get access to your money whenever and wherever you like. And, for every R100 you save, you get a ticket into a monthly draw where you could win R1000! It's our way of encouraging a habit of saving. The R100 will always be yours, you just now have a chance to win money by saving too.

Moku Tip: The amount of money you're saving should not necessarily be your focus in your 20s, the habit of saving should be. 

Start a budget

Make budgeting a habit each month. Budgeting does not have to mean restrictive and a way for you to not have fun. Instead, it should be the framework that actually gives you the freedom to properly enjoy your life. 

"A budget is telling your money where to go instead of wondering where it went." - John C Maxwell

There are many approaches to budgeting and if you want to find out the one that works best for you, read this blog post. 

Want to kick-start your budgeting? Download our FREE, customisable budget template now. 

Be careful about an over-reliance on credit

When it comes to your spending habits, it's important to know that an over-reliance on credit is never a good thing. You should be very wary about continuously looking to credit to supplement your income. The problem with an over-reliance on credit is that you have to pay it back, and eventually, if you have too much debt, you won't have enough income to cover all of this debt. It's a terrible cycle. 

Also remember, the credit you take out is usually charged with an interest rate. Retail or store accounts in South Africa can have interest rates of over 20%. You're very likely always going to be paying a lot more for the credit you actually get. 

Spend less than you earn 

One key financial skill you will learn in your 20s is how to spend less than you earn. This way, you will always know how to manage your 'little' which is crucial before moving into your more. If you can't manage what you're earning as an entry-level employee, chances are you won't be able to manage what you earn in a more senior position. Take advantage now, when you're possibly still living at home to spend less than you earn. By doing this, you can allocate more money towards your savings which your future self will thank you for. 

Who is Meerkat?

MyMeerkat FSP is an authorised financial services provider (FSP 50979). We are committed to helping South Africans do MORE with their money. We specialise in helping individuals build an emergency fund, get out of debt, get affordable funeral cover and protect their income with credit life cover should the unexpected arise.