Top 5 Money lessons In Your 20s

The top 5 money lessons in your 20s are to learn to budget, lifestyle inflation, saving & Investing Credit cards, and about job prospects. Understanding these 5 lessons will put you on a great step forward in your twenties to help set yourself up financially for the next coming decades.

Being in your twenties can be a stressful time when you wish to experience lots of the world, and spend time with your friends, all while trying to balance it with your finances. These 5 money lessons for when you are in your 20s should help you navigate and prepare yourself.

Learn To Budget

Budgeting is one of the most important skills to have when it comes to financing but it’s one of the most overlooked. It isn’t about what you cannot have or afford but allows you to make the most of your money.

A survey done by YouGov found that close to 40% of UK households are just one paycheque away from potential homelessness and that 37% would be unable to cover their housing costs for more than a month – living paycheque to paycheque.

Budgeting will allow you to find your true financial positions when it comes to month to month spending, allows you to figure where you are potentially wasting your money and allow you to direct your money to areas which you find important.

Learning to budget will be one of the best money lessons in your 20s.


Lifestyle Inflation

In your twenties you typically have a low income wage as you are finding out what type of career you want or have started on your career journey. As you progress up the ladder or change jobs for a higher pay, you may get the feeling of upgrading your lifestyle, going on more holidays, getting a better phone or upgrading your car to a new fancy model.

These are identifiers of lifestyle inflation, where you are increasing your lifestyle to match your increasing income. While that is a benefit of progressing in your career path it means that you wont accelerate your saving or investing journey and if anything create more liabilities.

Coupling a budget with an increasing salary means you can boost your savings rates and get closer to your financial goals.

Balancing Saving & Investing

Life comes with many big ticket expenses, many are the typical first car, first house, possibly a wedding and so on. When you are in your twenties you encounter many of these in the short term.

For example you are able to get a provisional licence for driving at 16, meaning a focus is saving for your first car to get yourself a bit more independence. Your first car is most likely the first big ticket purchase you will encounter on your financial journey.

In the UK there is a big social norm for owning your own property, though this is increasingly harder for the younger generation. Dampening your lifestyle inflation as you progress, coupled with a budget can help you on this journey. Along side this are specific savings accounts such as the Lifetime ISA which you can use to create a deposit for your first house.

Find out more about the Lifetime ISA here.

These big ticket purchases such as the first car and house are short term goals and should be viewed as short term saving goals.

Alternatively investing is for long term goals, such as retirement or early retirement.

It is key to balance out taking care of your future self with investing while being able to afford the expenses of being in your twenties.

Credit Cards & Loans


Being in your twenties you and your friends want to go experience life, go on holiday or go out at the weekends, while saving for the previously mentioned big ticket items. All these expenses are a perilous juggling act of financial artistry.

Sometimes the numbers just don’t add up. These days services such as Buy Now Pay Later (BNPL), finance and loans are pushed in almost every industry. It can be easy and quick to set up such payment options but these can do long term damage to your financial future if not handled correctly.

In fact Buy Now Pay Later schemes is a rapidly growing online payment method with 37% of Brits saying they have used such schemes. Companies such as Klarna, which is one of the more popular BNPL companies, have 460,000 active users as of July 2020 according to Finder.

BNPL Finder Statistics

If these types of loans are used incorrectly they can affect your credit score and affect things like purchasing your first home.

Keep an eye on your money through budgeting, don’t be afraid to say no, that you cannot afford something. Keep your financial goals in mind and don’t go into debt over small things.

Managing your finances and budgeting for expenses, while staying away from bad debt will be a lasting money lesson in your 20s that your future self will thank you for.


When you are in your twenties you are figuring out the path you wish to take, especially when it comes to your job.

When you are 18 you have the decision on whether to go into full time work or whether to go to University to progress in a certain field of work.

It can be a stressful time working out if you are making the right decision and this stage can affect your long term earnings.

It is good to keep in mind that University is not the only option as you can go into full time work but an often overlooked option is vocational education, where you can learn and earn. This all comes down to you, how you learn but also the field you wish to advance in.

It is key to remember that you can go to university at any age after leaving school and that there are other courses you can take if you wish to change professional fields down the line.

Looking to increase income? Changing jobs can yield higher pay increases than pay rises but it comes with higher risk as you will most likely be put on probation, a risky period of time when starting a new job.

But there is a stark difference of pay between those who chose safety of a job compared to changing companies.

“During the second year of the pandemic, half of the workers who changed jobs saw their pay increase 9.7%, while the median worker who stayed in the same job experienced a loss of 1.7%.”

Forbes – Want A Pay Raise? Switching Jobs Has Much More Upside Amid Soaring Inflation, Report Finds

Money lessons In Your 20s

Hopefully with these 5 lessons for when your twenties will help you with your first steps on a long journey with finances.

The key to long term finances is to budget, which is a skill in itself, and is something that over the years you will improve on and refine.

A key tip is that you can only cut so much from a budget while income is relatively infinite. Once you have your budget locked in, it then opens up time and emotions to focus on the earnings side of life, enabling you to hit your financial goals for the short and long term.

Knowing your money, income, expenses and being sure of your financial situation will give you confidence to progress throughout life.

These 5 lessons are key in your twenties but are constants even when you are in your 30s and above. developing these skills will help you long term.

Being in your twenties means you are still young with lots of short term saving goals in mind. Check out our article on the 5 best ways to save cash, to help you make the most of your money.

5 Best Ways to Save Cash


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