Financial goals for your 20s
Your twenties are an exciting decade marked by several significant firsts: your first real job, your first car and your first home. And, as this is the decade you’ll start establishing your financial independence, it’s probably also the first time you’ll find yourself needing to set proper financial goals. Here are six worth having on your radar.
1. Put a budget in place
You may not have too many expenses or responsibilities yet, but it’s important to start your financial life the way you’d like to continue it, and having a budget in place is key if you’re planning to get (and stay) financially fit.
“Budgeting has only one rule: Do not go over budget.” – Leslie Tayne
2. Start an emergency fund
Because life is full of surprises, most financial experts recommend starting an emergency fund to cover unexpected expenses like car repairs or a dental procedure. This is especially important in your twenties when you’re still in the early days of your career and money is typically quite tight. How much should you aim to stockpile? Most experts recommend 3–6 months’ worth of living expenses.
“Your emergency fund is not an investment, it’s insurance with one purpose – to protect you and your family.” – Dave Ramsay
3. Build a credit history
If you’re planning to buy a car in the near future or a home further down the line, it’s important to start building a credit history in order to secure vehicle finance or a home loan. Getting a credit card is one of the easiest ways to build a history, as long as you make your repayments on time and always for the full amount. Failing to do so can result in a poor credit score, which can make it difficult to access credit and can also affect the interest rate you’re offered by your financial institution.
“If you don't take good care of your credit, then your credit won't take good care of you.” – Tyler Gregory
4. Plan for retirement
It’s never too early to start saving for your golden years. In fact, the earlier you get going the better, as you’ll have more time to grow your retirement nest egg and you’ll reap the rewards of compound interest, which allows you to earn interest on your original investment as well as the interest earned on the initial sum.
“Someone's sitting in the shade today because someone planted a tree a long time ago.” – Warren Buffet
5. Save, save, save
While you may not be earning a fortune just yet, you’re probably in the best position to save when you’re in your twenties as your responsibilities are still fairly light and you’re more than likely a few years away from starting a family. How much should you save? The 50/30/20 rule recommends that you put away 20% of your monthly salary, but as that’s not always possible, aim to save as much as you possibly can.
“The way to build your savings is by spending less each month.” – Suze Orman
6. Put Salary Protection in place
If you haven’t come across this type of cover before, it’s definitely worth some serious investigation. In short, salary protection is an insurance product that pays out a percentage of your salary in regular monthly payouts in the event that you’re unable to work as a result of an injury or illness. And that’s important because it can help you cover your living expenses and, if you have a young family, you’ll be more able to provide for them until you can resume your career, or until a set retirement age if you’re unable to work again.
Are you covered?
Salary Protection from Standard Bank’s direct life insurance services offers peace of mind and keeps you moving in the right direction. And because taking out cover is an important financial decision, it makes sense to choose the bank trusted by millions of South Africans for over 150 years. Get a quote today or ask a customer service agent to call you back.
Photo by rawpixel on Unsplash