How To Save Money In Your 20s

I never really thought about my financial future with two capital “F”s  until very recently...

A couple of months ago, I graduated from university with first-class honors on the upside, but massive debt and unemployment on the downside. And ever since my unceremonious graduation (Thank you COVID), I have been caught up in a whirlwind of job applications, rejections, unstable part-time work, and the existential fear that comes with financial insecurity. 

I share this experience with a lot of recent graduates. We are part of an entire demographic that is most likely to be in an unstable contract and/or part-time work and least likely to be in permanent or full-time employment.

Earning money in your early 20s is therefore already hard enough. Saving money can consequently quickly become an easy afterthought. 
However, saving is important for experiencing greater security in life and creating the safety net that can catch you when life throws us off our feet.
So here is the breakdown of how to save money in your 20s: 

Financial goals, say it with me! 

Setting financial goals can start with setting up an interest-earning accounts. For example, an emergency fund, an account for a future down payment on a house, a retirement fund, or holiday savings. Additionally, as you get older, setting up funds for assisted living options is also an important financial consideration.

Everything outside of your main account that you can easily divert leftover money into is good! Try to have a number in mind for how much money you want to save! 

Setting the actual goal will create the motivation to get there!
Lastly, don’t feel too disheartened if it is only very little money you can put in these accounts. The amount is not really important. What is important is making saving a habit! 

Create multiple streams of income

I am writing this, knowing that it can already be hard enough to have a primary source of income as a student or recent graduate. 
However, there are a couple of jobs you can pick up on your downtime that will enable you to earn some extra cash! 

You can sign-up for apps like Task Rabbit, Stint and Zenjob that will connect you with easy day work in your area. 
Temp agencies like Mise En Place and Studentpartout also offer flexible ways to earn money by waitressing for upcoming events in your area. 
If your current job is not paying a lot, or you simply need an additional source of income, the gig economy can throw you and your savings an essential lifeline. 

Passive income 

Because who doesn’t like earning money with minimal labor? 

Passive income can start with selling your professional photography on websites like Getty and Shutterstock, selling your designs on merchandise through TeeSpring and Redbubble, or selling short stories as e-books on Amazon. 

Your creative hobby that is sitting around as a file on your laptop actually has the potential to generate some money for you and your savings. Let it. 
It is also never too early to set up an investment portfolio. Yes, you heard me right and you don’t need to be a financial pro to do it.  Index funds are known for being easy to invest in and creating stable returns! They are the perfect way to make your money work for you, or use a stock analysis tools to improve your performance.

Try to save money on housing

I am currently living in London, which is also widely known as the European capital for expensive rent. In my first year of living here, I spent almost 90% of my income on it. 

The rule of thumb for rent, however, is that it should not be more than one third of your income. For students, who live on a dire loan, this might be a bit harder to arrange. 

Those of you in permanent, full-time employment, on the other side, should try to stick to this. Save that leftover money now and thank me later.

The 50%, 30% and 20% rule can also be a useful guide! It reserves 50% for rent, bills and food, 30% for personal expenses like clothes and your Netflix, and 20% for savings. Whatever your budget plan is, it only works effectively if you have enough money to cover your bills and save a bit on top of it. 

Taking charge of your financial future can be terrifying. 
Especially if you a part of a marginalized community and/or a marginalized gender. 
The gender wage gap starts right after graduation and there is also a gender debit and a gender credit gap that isn’t usually talked about. 
The pandemic has also widened the racial wealth gap. Black households are currently representing 31% of the bottom income quantile, although black population in the UK is only at 3.3%. 

In light of figures like these figures, if you belong to one of these communities, finance can quickly seem like a numbers game you’ve already lost. However, this still should not discourage you from taking your odds and playing anyway. This was a guide on how to start doing that.