The 20s can be a confusing span where we get confused easily for almost everything. We are not sure about our career, ambitions, what we like, what we do not like, some go through depression, and whatnot. Lots of things go on.
During this period, very few people think about saving money and all. Trust me, if you are also going through this phase, you are not alone.
Almost every individual goes through it, including me. However, nowadays, due to the availability of the internet, most people know the benefits of starting to save money in their early 20s.
I know every person is different and has to encounter different challenges in their lives. Some of you might be searching for a job, some of you might have a job, and some of you are just wondering what to do with your lives.
I got you all.
But regardless of the situation you are going through, you must start saving in your 20s. Now the question is how to start saving?
The answer is very easy and straightforward. If you want it, you have to work for it.
See, I’m not a financial expert, but I was in your shoes once, and I know how difficult it is to manage finances.
This is the time we need the proper guidance, and in my case, I needed to understand everything on my own.
So whatever you are going to see in this guide is my personal thoughts, tried and tested ways by my own. I’m writing this to help individuals like me (I was) who are in search of normal ways of saving money.
How to guide: For starting saving money in your 20s
Total income
In 20s, most people start earning and have a stable job. If not a job, some people start working part-time or do freelancing. Means you have some kind of sources from which you get a monthly income.
Now, get back to our topic. The first thing you have to do is calculate the total amount you get every month.
Here, I'm asking you to calculate the total amount because if you have more than one income source and you get a non-fixed amount every month, you must calculate the total amount.
Make the list of every month spending
There are some unavoidable monthly expenses for which you have to keep money aside.
But do you make a list of those expenses? Have you ever thought for a minute what your monthly expenses are?
If not, you have to. Start making a monthly expenditure list. Include every expense in it, whether it’s small or big. It helps you see your monthly expenses with crystal clarity.
What you left with after spending
This is the important one. You created the list and calculated the monthly expense. Now, how much do you have left with?
After understanding your monthly expenses, you need to figure out the amount you could be left with every month.
The money you left with is it enough to start saving
After paying for all your monthly expenses, do you have enough money to start saving?
In some cases, there is a possibility that you don’t have any amount left with, forget about enough.
So what’s next? Well, the next point will prove beneficial to you.
Recheck your monthly spendings and declutter it
Now, go back to the second point. Check your list to find out what you can remove from it.
As I said, in point 2, include all the expenses. In that list, some expenses may not be so mandatory, so simply remove them from the list.
Understand the difference between wants and needs. Some people confuse these two terms and tend to spend more.
As human beings, we all have some desires, but you have to ensure that those desires do not affect your pocket.
So work on the list again, and you’ll be surprised to see how much you can save every month.
Make the habit of saving 20% from your total income
Yes, you read it right. You must have a habit of saving at least 20% of your total income. You can earn as little as possible or big but start keeping 20% aside for savings.
There could be some challenging situations when it won’t be possible for you to save that 20% but this is the time when you really need to do it to make it a habit.
Suppose there is a situation where even after all your efforts, you are unable to save, the next month, keep 40% aside. Train your mind that saving 20% aside every month is your responsibility, and you have to do this anyway.
Look for investment schemes
There are a number of investment schemes available in the market, but while making your selection, consider your monthly total income and the place you reside in.
Also, you can choose the investment schemes, depending on your short-term and long-term goals.
Nowadays, people tend to invest in stocks, binaries, cryptos, etc. No issues with that.
As you might be aware, these investments involve risks, and when we invest in something, we expect to get some fixed return. I don’t know about you, but I do.
So in my opinion, make your investment in these trending options, but along with these, choose stable investment options from which you’ll get guaranteed results.
Let me tell you what I have done. I have chosen two government investment schemes and have invested in mutual funds. This way, I’m not putting all eggs in one basket.
You can also do something like this. Not exactly this. You are free to make your decision.
Finish the debt (if you have any)
Do you have any debt? If not, that’s a good thing. But if you have any, try to repay them as early as possible.
By finishing your debt sooner, you can save for other important stuff and make your life stable.
Repay your debt with amazing side hustles within a short span. Also never take unnecessary debt if possible try to avoid it as much as you can.
Have an emergency fund
If all your attention is on saving money, you have to think again. Along with saving, you should have an emergency fund that you can use on rainy days.
Keep your emergency fund in a separate bank account and never touch it until there is an actual emergency. Every month, transfer a small portion of your total income to an emergency fund.
Mostly, this emergency fund could be helpful in your retirement. Yes, retirement.
Keep track of your expenses
You really need to do this. Doesn’t matter how tiny or big you are spending on, just mention it somewhere. You can use a diary, sticky notes on mobile, a spreadsheet, or, if you want to use something advanced, you can even use a personal expense tracker app.
Go for whatever feels right for you, but keep track of your expenses, as it helps in the long run.
Keeping track of expenses doesn’t mean that you only need to mention the things you are spending on. You also have to keep your eye on the amount coming to your bank account through any medium.
I personally prefer a diary to mention my daily expenses. At the start of the month, I calculate the amount I’ve got and then keep on listing the spending I do every day.
Practice self control
You can not do anything in your life unless you have self-control.
You know you shop a lot, and you want to control this habit. Whenever you see something trendy, you are unable to control your urge to buy that product.
This is where self-control comes to play. If you do not have self-control, just forget about controlling your shopaholic nature.
If you have watched a shopaholic movie, you could easily understand how spending too much on shopping can destroy your life.
If you really wanna change your life and do the things that you have been wondering for too long, you must start practising self-control from this moment.
Pro Tip - Know your financial goals
See, saving and investing, these two terms totally depend on your financial goals. So having financial goals is really important.
Suppose you want to buy a house; accordingly, you have to plan your savings and investments. You must think about some crucial points, such as when you want to buy a house, how big the house will be, where you want to buy a house, etc. This will help you get more clarity in your thought process.
Bottom line
Feeling motivated?
Well, only getting motivated will not help you out. You have to start saving from this moment to make it a reality and live the life you want.
I know this is not going to be easy. Well, nothing is easy, and if it is easy, anyone could have done it. Start slowly, and eventually you’ll become an expert in handling your money.
When I started, I also faced so many difficulties, but having self-control and a clear vision helped me to achieve my financial goals.
So sending lots of luck.
Hope this blog helps you out a bit.
FAQs
How can I start saving money in my 20s?
Ans - First, gather information about your state savings schemes. Second, start investing in one scheme first and slowly increase your count. You can start saving only 20% of your total income and increase the percentage when it feels right.
How can I start saving at 25?
Ans - 25 is commonly known as mid-20s, so this is not too late for you to start saving. By following the 50/30/20 rule, you can start saving at any age in your life. You only need to have a clear goal for it.
Is 25 a good age to start saving?
Ans - Yes. Any age is good to start saving.
How much should I save per month in my 20s?
Ans - Trust me, you can start as little as possible, but try to save at least 20% every month.
Where should I put money in my 20s?
Ans - As I said, this age confuses people a lot. Most people search for quick rich schemes, and this is where they make mistakes. Don’t fall for such schemes, don’t put all your money in one scheme, search for government-authorised schemes, and the rest of the information you can check on this blog itself.
