8 Financial goals to reach in your 20s

Your 20s is a time where you begin to establish your foundations and so it’s an important time to begin making decisions that will serve you throughout your life, such as with your career, partner, and, of course, your finances. 

By establishing good financial habits and goals in your 20s, these habits will help you reach your financial goals and be in a better financial position later down the line. So we’ve given you 8 financial goals to consider to help you work towards for a future of financial independence;

1. Building an emergency fund

Building an emergency fund is crucial to establish a sense of financial security simply because life happens. Whether your car breaks down or you suddenly lose your job, having money aside for in-case-of-emergency can give you peace of mind if any unexpected expenses or situations arise. 

A good rule of thumb is to start saving towards having 3-6 months’ worth of living expenses covered. It’s also important that your money is put aside in low-risk and accessible environments such as a savings account or in cash, as you want to make sure that you can access it at any time. 

To learn more about emergency funds and building your very own, read our blog here.

2. Establishing healthy financial habits

Your habits in your 20s directly impact your future, and so it’s important to (try) to establish good ones…

Having healthy financial habits, such as budgeting and living below your means, can help you to build significant savings, but also help you to become financially disciplined. By building these habits in your 20s, you’re more likely to have much better financial management that you could continue to adopt throughout your life to achieve financial independence.

Whilst your 20s should be enjoyed, try to make smart financial decisions & you will thank yourself for later down the line!

3. Contributing to your retirement

Believe it or not, it’s never too early to begin contributing to your retirement. Making an effort to put aside money into your retirement account in your 20s will not only help you to get in the habit of saving, but it will also help you to give a head start! This is because of the power of compound interest, where the more you put aside whilst you’re young, the more that money will grow over time, which will allow you to retire much more comfortably.

4. Avoiding high-interest debt 

High-interest debt can be incredibly burdensome to not only your finances but also your mental wellbeing. Having said that, with our credit cards at hand, it can be tempting to want to max them out and spend money that we can’t necessarily afford.

Not only will high-interest debt cost you a lot of money down the line to repay, but it could also quickly spiral out of control and ultimately affect your overall financial health such as lowering your credit score. Therefore, it’s important to avoid them, and if you do have high-interest debt, it’s important to face those numbers and work towards paying them off sooner rather than later. 

You can read our blog all about managing debt here.
 

5. Start investing

There’s no such thing as perfect, but if there was a perfect time to start investing it would be in your 20s (or even sooner). This is because the earlier you start, the more time you’ll have in the market to be able to potentially see your initial investments grow and reap the powerful benefits of compound interest. Getting into the habit of investing can help you to build your wealth beyond just your paycheck or retirement account, but remember that returns are not guaranteed and so you should only invest what you can afford to lose.

What you choose to invest in is completely dependent on you, your finances and your circumstances, however, there is certainly something for everyone and it’s even better to diversify your investment portfolio. To learn more about the different asset classes that you could potentially invest in, read our blog here. 

6. Building your credit score

The magic number! 

Your credit score is one of the most important factors to your financial health as it essentially determines how well you handle your finances. This means that with a high credit score, lenders are more likely to allow you to borrow money and offer you lower interest rates, which could ultimately save you money later down the line. 

Whilst your credit score may not seem important just yet, it may certainly come into play when you’re ready to make those big decisions such as getting a mortgage or buying a car. Therefore, your 20s is a great time to begin building up your credit score, which will also help you to make more conscious financial decisions, such as paying bills on time and avoiding debt, along the way!

7. Setting financial goals 

Setting goals is important at any point in your life, but especially in your 20s. This is because it gives you a sense of direction and something to work towards. By being clear on your goals, or even just having a rough idea, it will help you to be more intentional about how your money is being spent. 

We’ve probably all been there where we have mindlessly spent our money on random things that we now can’t even recall. This is where having financial goals may help you to be more conscious of the financial decisions that you make to ensure that you are on track to reaching those goals.

8. Having side hustles

Relying solely on one source of income in this day and age can be risky, especially in times of uncertainty. In your 20s, you’re likely to have fewer responsibilities and, therefore, more time on your hands to pick up a side hustle or two!

If you’re unsure of where to start, check out our blog where we give you 12 side hustles that anyone can try. Your side hustle could be something that offers you some quick cash or perhaps something you’re really passionate about that you could nurture and grow into something bigger such as starting your own business. Whatever it is, using your 20s to build multiple income streams will help you to gain much more financial stability and the money you earn can be put towards good use such as contributing to your retirement, saving goals, or investments.

With these goals in mind, we hope that this helps you to begin thinking about how you could use these pivotal years of your life to make some smart #moneymoves that you will thank yourself for. With that said, remember that everyone’s financial goals are different and there isn’t a timeline or race when it comes to your financial journey, so enjoy the ride!

The following is for general information and is not intended as a form of financial advice by Finndon or its representatives, nor the information intended to be relied upon by individuals in making any financial decisions.