10 Financial tips for 20-somethings

10 Financial tips for 20-somethings that can help you at any age

When we’re in our 20’s, many of us survive from paycheck to paycheck, which can prevent us from planning ahead. When you’re caught up in making ends meet, it’s difficult to commit to a long-term savings plan. We spoke to a few people about what advice they would share with their 20-year old selves, and here’s what they had to say:

1. Learn to negotiate

Learning the art of negotiation is not only important in business, but also in your everyday life. The idea of negotiating can be intimidating - but if you know how to do it, you can save a lot of money – from negotiating your rent with the landlord, asking for a raise or getting a better interest rate on your credit card - don’t be afraid to ask for better terms; it will benefit you in the long run.

2. Be tight-fisted with your money

Be frugal with your money. Don’t spend every cent that you earn. Writing a list before you go to the grocery store will stop you from making impulse buys and unplanned purchases—just make sure you stick to it!

3. Learn how tax works

For most people, the thought of paying income tax makes them anxious. Whether you file your tax return on your own or use a tax professional, you need to know exactly what taxes you are liable for. Your tax is used by the government to pay for things like keeping the roads up to scratch or expanding your city’s infrastructure. When it comes to tax, knowledge is power, so educate yourself.

4. Don’t take on huge amounts of debt

Taking out a loan to cover certain expenses is part of everyday life. Once you start earning your first paycheck, opening store accounts and taking on debt to service your lifestyle can be tempting. When taking out a loan, make sure that you can afford the repayment terms. Don’t take on more debt than you can comfortably repay.

5. Start investing early

Saving is different from investing. Savings are normally low-risk funds that are short-term and easily accessible. Investing, on the other hand, is used in building wealth, and usually not easily accessible. While investments involve greater risks, they also yield greater returns. Start investing as soon as you can – it’s never too late.

6. Get insured

Most people need insurance at some point in their lives. When taking out insurance, whether life, business or household, make sure to shop around to get the best deal. Remember to pay close attention to what your policy offers and read the small print - the devil is in the detail!

7. Build an emergency fund

An emergency fund is money that you have set aside to specifically cover any unexpected expenses that may come up. An emergency fund may cover unexpected car repairs, medical bills or other emergency situations. Consider saving whatever amount you can now until you have at least one to three months’ worth of take-home pay saved.

8. Create a life file

Create a life file with a list of all your banking and investment accounts, household bills and insurance policies, along with any online usernames and passwords. Tell someone close to you where to find the file in a case of an emergency. Alternatively, create an online file, and share the username and password with your next of kin. This way, they will easily be able to access important information from anywhere in the world.

9. Learn how credit cards work

Credit cards offer you a line of credit that can be used to make purchases but require that you pay back the loan amount in the future. When using a credit card, you will need to make at least the minimum payment every month by the due date on the balance. Many credit card companies now offer additional benefits and rewards. Find out what your credit card provider offers you, and switch to a better one if need be.

10. Start saving for your retirement

We’ve all heard how important it is to save for your retirement, but only 6% of South Africans can afford to retire comfortably. Take advantage of a company pension or provident funds – companies often contribute towards their staff funds.


Even when you're in your 20s, burdened with student-loan debt and earning an entry-level salary, it's still possible to make savvy financial decisions that will positively impact the rest of your life.