Your 20s are often seen as a transition phase toward independence, including financial independence. Many young adults start earning money, but not all know how to manage it wisely.
Without solid financial skills, you may fall into reckless spending, struggle to save, or even accumulate debt without realizing it. That’s why it’s crucial to build healthy financial habits early on! Here are some essential life skills you should master to ensure a more stable financial future.
Smart Budgeting
Have you ever wondered why your salary disappears so quickly? That’s a sign you need budgeting! Setting a budget is the first step to controlling expenses and ensuring your money is used wisely.
A simple budgeting method to try is the 50/30/20 rule:
- 50% for necessities (food, transportation, bills, etc.)
- 30% for wants (entertainment, shopping, dining out, etc.)
- 20% for savings or investments
To make tracking easier, consider using finance apps to monitor daily expenses, such as Money Lover, Wallet, or Spendee.
Differentiating Needs vs. Wants
FOMO (Fear of Missing Out) often tempts young people to buy things or experiences they don’t need. Whether it’s the latest gadgets, trendy fashion, or daily café visits, these expenses can drain your finances if left unchecked.
Before making a purchase, ask yourself:
- Do I need this?
- Can I live without it?
- Does it fit within my budget?
If you’re unsure, delay the purchase for a few days. If you still need it afterward, consider buying it.
Saving and Building an Emergency Fund
Saving is a habit that is best started early. Ideally, you should allocate 10-20% of your income to savings or an emergency fund.
Why is an emergency fund important? Because life is unpredictable! You could face a job loss, unexpected expenses, or emergencies requiring large sums of money.
Tips for building an emergency fund:
- Open a separate account to avoid using the funds for non-emergencies.
- Aim to save 3-6 months’ living expenses as your emergency fund.
- Start small, but stay consistent.
Learning About Investments Early
Saving alone isn’t enough—you must invest to grow your money! Inflation can reduce the value of your savings over time, so investing helps keep your money working for you.
Investment options for beginners:
- Mutual funds – Ideal for those with small capital and low-risk appetite.
- Gold – A stable long-term investment.
- Stocks – High return potential but requires a good understanding of the market.
Most importantly, avoid scams promising quick returns. Always research before investing and choose trusted platforms.
Managing Debt Wisely
Debt isn’t always bad—but it must be managed wisely. There are two types of debt to understand:
- Productive debt → Used for things that increase financial value, like business capital or education.
- Consumptive debt → Used for depreciating items, like gadgets or vacations.
Avoid debt for lifestyle upgrades or unnecessary purchases. Stick to responsible borrowing practices to maintain financial stability.
Conclusion: Start Now!
Mastering financial life skills in your 20s will set you up for future stability. Begin by budgeting smartly, saving consistently, building an emergency fund, investing wisely, and managing debt responsibly.
You don’t have to be perfect—what matters is starting and continuously learning. To simplify financial management, use V-Nancial in the VENTENY Employee Super App. V-Nancial helps you track expenses, access financial services, and improve financial literacy effortlessly. Download the app now and take control of your finances!
