Are you wondering if you’re earning the same amount of money as other people your age, or if there are financial milestones you should be hitting in your twenties? Perhaps you just want to know what the deal with superannuation is. Whatever questions you might have, we’ve compiled a quick guide to everything you need to know about finance in your twenties, plus links to other helpful in-depth finance topics.
What should you be doing with your superannuation?
Mark O’Leary, of KRA Wealth Management and AMP financial adviser, says people in their twenties should focus on consolidating any superannuation accounts they may have collected from various jobs over the years into one account to save on fees and see a better return on your investment.
“The recent introduction of the First Home Super Saver Scheme (FHSSS) designed to help young Australians get onto the property ladder means you can now access some of your superannuation early and use your funds towards a deposit on your first home. There are some rules and restrictions in place. However, for young people set on owning their own home, this can be a great way to get ahead and benefit from the schemes favourable tax incentives.”
Want to know more about superannuation? Read the guide HERE
What should your money goals be during your 20s?
Mark recommends focusing on paying off any credit card debt or loans you might have as quick as possible. The next goal would be to take control of your superannuation and roll all of your accounts into one, high-performing superannuation account with a history of achieving high returns. Then it’s very advantageous to start contributing extra to your super, either by pre-tax contributions (salary sacrifice) or after-tax contributions. The next goal would be to start building your wealth, such as setting up a budget and making a savings plan.
Want more financial advice for young people? Read the guide HERE
How much money should you be saving in your 20s?
Broadcaster Triple J surveyed 11,000 young people aged 18 to 29 and found more than half of young people have less than $5000 saved, and a quarter have less than $1000 saved. AMP also reports that one in eight Australians don’t have enough cash set aside to cover a $100 emergency expense. In your twenties you should prioristise setting yourself up with emergency fund (rainy day fund). Ideally, an emergency fund would have enough money in it to cover all basic expenses, such as rent, bills and food for three months should something happen to you, such as losing your job.
However, ASIC’s Money Smart recommends starting small and working towards a bigger goal, such as putting away between $10 and $50 a week into your emergency fund, in addition to other savings goals, such as saving towards a holiday or house.
Want more tips on saving money? Read the guide HERE
How much money should you be earning in your 20s?
While there is no hard and fast rule here, data collected by the Australian Bureau of Statistics found that people aged 21 to 24 earn $3027 per month on average, and people aged 25 to 34 earn $4774 per month on average.
Want to know how much money the average Australian person spends and saves? Read the Guide HERE
Money mistakes you should avoid making in your 20s
- Not setting yourself a budget
- Using a credit card or loan to pay for everything and accruing debt
- Going to uni without a plan (those HECS debts add up!)
- Spending money for the sake of keeping up with other people or appearances
- Spending beyond your budget on a wedding
- Not prioritising building up an emergency fund or saving towards a goal
Want to know how to pay off debt? Read the guide HERE
What assets should you be developing in your 20s?
Vanessa Stoykov is an independent finance expert and she says developing investments/shares is a great way to start saving, learning about money and are more of a long-term asset.
Think you might be ready for home ownership? Read the guide HERE
How should you manage your money in your 20s?
Realise that now is the best time to start thinking about where you want to be in the future and make decisions accordingly, says financial advisor Vanessa Stoykov. That means sticking to a budget, paying a little extra into your super and stashing away some cash for those rainy days. Avoid debt as much as possible.
Want some more advice on coping with unexpected expenses? Read the guide HERE
What is the biggest drain on money in your 20s?
“Items such as clothes, jewelry, festivals and nights out are common for this age bracket, and I’m the last person to say you shouldn’t enjoy life - but be smart about it,” says financial expert Vanessa Stoykov. “Rather than going to a restaurant with friends every week, consider having people to your apartment or house more often and cooking a BBQ instead, it all adds up in the long run.”
Want to reduce your expenses without sacrificing your lifestyle? Read the guide HERE
What money habits should you develop in your 20s?
A good money habit to develop at this age is thinking forward to your financial future. What you do now will shape your financial position tomorrow.
Want to improve your financial situation in 24 hours? Read the guide HERE
All the advice in this story is general in nature and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.