5 Ways to get a Head Start with Money in your Twenties

A group of us sat down and started to discuss the things we would do differently if we were in our early to mid twenties. This is the stage where you are anywhere between the latter years of university to the early years of your career. This group, who are not in their early twenties anymore, all wished someone had pointed out a couple of things to them. When it comes specifically to money, I always hear people lamenting how they wish they knew certain things when they were younger. In our Centonomy classes the people in this age group are usually the envy of the class. So, here are some insights that our group came up with for anybody who is in this age bracket. If you have a friend, daughter, son, niece, nephew, cousin etc please do make sure they read this.

1. Use your Time Well

A lot of us wasted our time while we were in our twenties. This may have been when we were in university where, in between classes or days with no classes we simply did nothing. We honestly could not account for our time. There seems to be a lot of sitting down, talking, watching every series that comes out, etc. Whilst we do appreciate some of the social bonds that spending time this way resulted in, a portion of it could have been spared for something more constructive. Businesses could have been started. I’ve talked to students who do things like make sandwiches for sale in school, sell t-shirts etc, and they are clearly on the right path. You may also have started working but probably at a stage where your family obligations are few. Your weekends and evenings are honestly yours. Most of us went out Thursday to Saturday night. Weekends were for sleeping and watching TV. A portion of that time could have been the side hustle, taking a course, joining useful associations etc (Click to tweet).

2. Separate your Needs from your Wants

The concept of budgeting can be a total myth at this stage. You earn money, get an allowance and your job is to spend it. Because of this, many people quickly get into the habit of actually spending more than they earn. A lot of us found ourselves in some form of debt e.g. to parents, shops, credit cards, store cards etc. At this age, we thought going out three times a week was a need. Buying another pair of shoes was a need. Getting that first apartment in a fancy area was a need. Personally, I wish someone had simply pointed out to me the amount of money I was spending buying lunch everyday. Eating lunch is a need. Buying fries everyday is a want. Lunch can be carried from home and you can do something else with that money. Having a roof over your head is a need. That apartment that takes up half your income is a want (Click to Tweet).

3. Save for your First Car or first Big-Item Purchase

To buy big-ticket items, save at least half of the amount before you borrow the rest. This would have forced many of us to buy a more affordable car and get used to living lifestyles that we can actually afford. Buying that first dream car on a loan does not seem that dangerous, but it entrenches in your psyche that you borrow for lifestyle. This is the trap that much older people have found themselves in. Every car bought ever since has been borrowed for. Income earned starts being seen as a means to borrow for something. In this day and age, fridges are borrowed for, deposit to rent a house is borrowed, furniture is bought on credit, loans for holidays are the norm. Whatever that big item purchase is for you, save up for it. If you’re not being kicked out, stay in your parent’s house a bit longer. This leads to knowing the difference between useful debt and useless debt. The above listed items demonstrate useless debt. Your access to credit is better off being used to get into investments that will grow your money.

4. Discover the Motivation for Investing

I didn’t really say how to invest. We all had an idea of investing and we knew we could probably get the information if we wanted to. What was simply lacking at this age is the motivation to do it. Buying a new car was honestly a more interesting proposition. So we concluded that if we had sat down to paint a picture of what we wanted in life and how we want it to turn out, that would have provided the much needed impetus. If we had simply learnt about setting goals that had meaning to us, then saving and investing would have become a way to achieve those personal gals rather than just a thing that everybody needs to do. I remember how life-changing it was for me to realise that lunch money is a decent holiday every year. I have carried packed lunch ever since.

5. Take more Risks

This is not the time to play it safe. You are young and have time on your hands to recover. This is not the time for conservative-type investments. This is the time to look for things that actively grow the value of money. This is not the time to evaluate different types of savings accounts, but different types of shares, properties, business ideas etc. Not just risks with money, but with work as well. This is the time to stand out and run the extra mile at work. Time to show initiative and speak out. Time to go for those out-of-town assignments. Time to volunteer. Time to risk rejection and approach those people who you think can mentor you. Take courses that teach you what you need to know. The biggest risk in life is not taking risks, especially at this age when you don’t have a lot of obligations.

The two hugest assets you have in your early twenties are time and energy; invest these resources productively (Click to Tweet). To those of us who aren’t in our early twenties, it is never too late. Our messes can become a message for someone else, even as we continue to move forward.

Are you in your early twenties and are looking to get a huge head-start with your finances? The Centonomy Campus Edition will kick-start and accelerate your journey into taking control of your finances. Click here to learn more about it.

Waceke Nduati-Omanga runs programs on Personal Finance Management and Entrepreneurship. 

Find her at waceken@centonomy.com| twitter @CekeNduati| Facebook.com/CekeNduati