Updated: Feb 3
As females in their early 20s, writing this article resonated a lot with us. Some of these are experiences ourselves and our peers have gone through. Let's paint the picture, you've left university, moved out of your family home, started your first job after graduating and it’s probably the first substantial amount of money you’ve earned for yourself. And with that comes a lot of opportunity to mess it all up, here are some of the mistakes and learnings we have from going through the first half of our twenties.
Don't feel like you're forced to save from your first paycheck
Often, your first paycheck after graduating will be the first lump sum of money you have ever received so your first couple of pay slips will take some time to get used to. *All this money for me? No way!* It took me until my third ever pay slip to regulate my habits when it came to saving. Admittedly, I didn't save anything from the first couple of payslips as I had rent to pay and furnishings for my flat to buy (as well as a lot of dinners and drinks), but how I see it it's temporary, you've worked hard, now enjoy the reward of your efforts for a short time before getting back into, or starting a strict savings regime.
Spending more than you make
You may have heard the saying live within your means. Whilst in your twenties this is particularly hard with everyone flashing their cash on social media. However, spending (an outgoing) more than your incomings is not sustainable.
Not setting financial goals
Yes, your twenties are a time for exploring and taking time to figure out the person who you want to be. However, setting your financial goals should be just as important as setting your career goals, or lifetime goals. Whether it’s wanting to pay off debt or book a dream holiday - have it as an end goal.
Living off credit cards
That plastic card in your wallet can be the go-to when it comes to purchasing. However, you will have to pay it back at some point.
But it's also good to remember if you are looking to buy something by credit card, you probably can't afford it and thus probably shouldn't buy it.
Not having an emergency fund
Although we said it may be a case that you splurge your first couple of pay checks, unforeseen circumstances can creep in. Whilst an emergency fund is good, it doesn't have to be a big one, start by putting a small sum each paycheck away just in case of any emergency situations. The golden standard is three - six months’ worth of salary.
Putting off saving for retirement
Why think about the future i.e. when you’re 65 when you’re just in your 20s and living your best life, what's the point in that, right? Well wrong. Because of the way compound interest works, the earlier you start saving for the future when you aren’t working, the better. This is because money can accumulate interest for longer.
Not checking your credit scores regularly
A credit score will help you when it comes to proving your trustworthiness and ability to pay money back for renting or buying a property, applying for a credit card or getting a loan. So, having a good one is key, you can start this by checking that all credit associated with your name is correct and making all your payments on time.
Not getting renter’s insurance
Let's not lie, renting or owning a property is expensive. You've got the rent itself, council tax, electricity and water bills. Insurance for your rental property may seem like another expense you can avoid paying out. Absolutely not. When disaster strikes and your boiler breaks or your pipe leaks, your home rental insurance that means someone can come out and fix your property at little/no expense to you is completely worth it.
Forming relationships with people who don't respect/align with your money views
Whether it’s a friendship or romance, ideally, we want to be surrounded with people who share our values, and especially when it comes to money. If you have friends that are going out drinking every weekend and spending £200 each time, which classes with your goal to save, assess whether you can afford to be in a friendship that fundamentally goes against your goals.