Written by Glen James

Host of the money money money (formerly my millennial money) & Retire Right podcasts & author of The Quick-Start Guide to Investing.

Hey 20-somethings! We love you guys. Here's some top tips for you to master money in your 20s.

Your 20s are a key time for setting up your life goals and getting your money in shape! But how do you save money? What should you invest in? What should your financial goals be? What mistakes should you avoid? Yikes!

To help with the financial overwhelm, Glen shared his top tips for managing money in your 20s in a recent episode of money money money - check out the episode and his tips below:

#1 keep out of consumer debt: credit cards, buy-now-pay-later, personal loans

One of the best pieces of advice anyone can put into practice in their financial life, no matter what age, is stay away from consumer debt.

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We’re talking about credit cards, buy-now-pay-later schemes, store loans and personal loans. Fun fact: credit scores are not the same thing in Australia as they are in places like the United States, so you don’t need to go and get a credit card to get a credit rating. Consumer debt has a nasty way of lingering around for not just years, but decades for some and it’s a hard habit to shake. These deals, despite what they advertise, are never designed to work in your favour - ever. So stay away.

Focus instead on saving money to spend on your goals - pay with cash. Learn the practice of patience and save for your financial goals. Get really good at budgeting or using a spending plan to ensure you’ve freed up as much money as possible to put in your savings or towards the things you value. Create healthy financial habits like spending less than you earn and you’ll be going further faster before you hit 30. Also, don’t go broke trying to impress people you don’t really like anyway.

#2 have fun!

Your 20s are a key time to invest in experiences and good times!

Now’s the time to have fun! You don’t have the cost of kids yet, you won’t necessarily have a mortgage to pay, your health is typically at its best and you’re basically just responsible for yourself, so invest in your experiences!

Make memories that last forever. Travel, live in fun share houses, eat great food with friends, enjoy going out and doing super fun things. The key is to cash flow these experiences with money you actually have - not consumer debt.

#3 be super intentional with your cash flow

One of the best ways to ensure you’re not just throwing money to the wind is to give every dollar a job - give a specific purpose to every dollar you earn. Keep your core expenses low (accommodation, transport, basic bills (phone, electricity, gas etc) and groceries) and stay focused on spending less than you earn.

A major part of this point is writing down your life goals and financial goals! What do you want in the short term and long term? It’s completely fine if you don’t have an entirely refined set of goals yet, but what is something you’d like to explore to determine if it is something you want? Get comfortable checking out new things and testing out ideas to find what fits with your values and strengths. Also, watch out for pesky lifestyle inflation - just because you earn more money doesn’t mean you need to spend it all. Save it! Invest it!

If you need a system to help you manage your money, then check out the Glen James Spending Plan. It’s a system designed by Glen James to be completely user friendly, simple and it supports you as you achieve your goals. Register here to get started.

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#4 build an emergency fund - save 3-6 months of expenses

Imagine tomorrow morning on the way to work your car breaks down. You get it towed to the mechanic (which costs money), then your mechanic looks it over (which costs money) then calls you to say the damage is going to cost you $3k. Ooooof. You know what you need? An emergency fund.

This fund is your financial life-saver, your budget protector and an all-round relief giver. It’s designed to provide the emergency cash you need when you’re hit with something unexpected - a car problem, a pet issue or a health issue. Anything you can’t plan for. If you don’t have this, suddenly you have to spend your grocery money on your broken leg. Then you have to find a way to pay for groceries and find a way to recover financially from your medical costs. It spirals super fast - so build an emergency fund and lock it away so you aren’t tempted to spend it. Glen usually recommends a fund of roughly 3-6 months worth of expenses, but with things like this, the more the merrier.

#5 invest in your career

Your career is hands down one of the best ways for you to build wealth, so invest into it to get the maximum return!

Glen and Shelley Johnson (host of this is work) have written a book called Sort Your Career Out & Make More Money all about how to maximise your career - get a copy for yourself and work through it! But some of the best work you can do in figuring out your career is determining your values and strengths - what do you value in your life overall? If flexibility is something you want then perhaps a remote role is what you need to be searching for. If you need fun in a workplace then seek that out! Likewise look to work in roles that use your strengths - if you’re great at presenting, find a job where you get to do that to the best of your ability. Study or train in areas that will in turn give you the ability to increase your income. This money serves you in return with options to spend where you want, how you want and invest for your future.