6 money lessons I wish I knew in my 20s

Ah, your 20s… a decade of freedom, fun, and plenty of life lessons. But let’s be real, when it comes to money, most of us could’ve used a bit more guidance. Whether you’re in the thick of your 20s or reflecting back on those carefree days, the financial decisions you make during this time can set the stage for decades to come. So, what would I tell my 20-something self? Here’s the financial wisdom I wish I knew back then.

1. Start saving early

It might seem impossible to save when you’re living off two-minute noodles and waiting for payday to roll around, but even stashing away a small amount in a savings account can make a big difference. Not only does it help you to establish a savings habit but the magic of compound interest means that the earlier you start, the more your money will grow over time. Think of it as planting a tree, the sooner you get it in the ground, the bigger it’ll be later. Aim to save at least 20% of your income. If that sounds like a stretch, start with whatever you can and increase it gradually. Even $10 a week can build up to something significant over time.

2. Don’t fall into lifestyle inflation

It’s tempting to upgrade your lifestyle as soon as you land your first "real" job. Suddenly, fancy dinners and online shopping sprees feel justified. But here’s the thing; just because your income increases doesn’t mean your spending should too. That’s called lifestyle inflation and it’s a one-way ticket to paycheck-to-paycheck living. Instead, try to keep your living expenses in check, even as your income grows. Maintain a modest lifestyle and stash those salary bumps into savings or a term deposit.

3. Credit cards and Buy No, Pay Later services are not free money

When you’re in your 20s, a credit card or Buy No, Pay Later service like Afterpay can feel like a golden ticket to all the things you want but can’t afford right now. But those small purchases can pile up, and before you know it, you’re stuck with a balance that’s racking up interest at a frightening rate. If you use a credit card, pay it off in full every month to avoid interest charges. And if you can’t do that, ask yourself if you really need whatever you’re swiping for.

4. Create a budget and stick to it

The word “budget” might sound boring, but it can be the foundation of financial freedom. Without a plan for your money, it’s easy to lose track of where it all goes. And no, checking your bank balance doesn’t count as budgeting. Use the 50/30/20 rule – spend 50% of your income on needs (rent, bills, groceries), 30% on wants (dining out, entertainment), and save the remaining 20%. There are plenty of apps that can help you track your spending without too much hassle.

5. Build an emergency fund

Whether it’s a car breakdown or medical expense, life has a way of throwing unexpected costs your way. Having an emergency fund, ideally enough to cover three to six months of living expenses, will give you peace of mind and prevent you from going into debt when things go wrong. Try opening a high-interest savings account just for your emergency fund. Don’t dip into it unless it’s a genuine emergency, and no, that concert ticket doesn’t count!

6. Don't sleep on superannuation

In your 20s, retirement feels like it’s a million years away. But your superannuation is one of the most important savings accounts you’ll ever have. Even small contributions can make a huge difference by the time you’re ready to retire, thanks to compound growth. Check that your employer is paying the correct amount into your super, compare superannuation providers and consider making voluntary contributions if you can afford it. You’ll thank yourself later when your super balance is looking healthy.

It’s never too early to start being financially savvy and if you missed the boat in your 20s, it’s not too late to get started now. Compare savings accounts below so your future self will thank you.