5 Best Money Habits For Your 20s

The 20s are arguably the best decade of most people’s lives. You’re financially independent, you have the freedom to take your own decisions and have a bright future to look forward to. You dream of amassing a lot of wealth and leading a happy, successful life. But this particular vision requires you to inculcate some essential money habits today.

We’ve listed the 5 best money habits to inculcate in your 20s – get on board with these for a wealthy, settled future:

#1 Save, save, save!

The primary money habit to inculcate during your 20s is the savings one. You must aim to save money at every opportunity. It teaches you how to remain focused and on track to meet future goals, like buying a house or car, travelling around the world, etc. Aim to save a fixed portion of your income every month the moment you receive your salary. If you are single, you must aim to save 50% of your income in a savings account that you do not normally withdraw from. This way, you will have a sizeable fund of money for emergencies – you won’t need to pay from your salary at that time.

#2 Use credit cards for all your spends.

Spending cash is a definite ‘No’ if you are watching your expenses. Once you spend a higher denomination note and get change, there is no accounting for how quickly the money disappears. The worst part is, you often forget what you spent all your cash on. Take the easier, more responsible way out – use one of the best credit cards in Dubai for all your spends. From shopping for groceries to booking holidays, and from buying movie tickets to paying restaurant bills, you can pay for everything using a credit card in Dubai. You get reward points for your spends that you can redeem later, and a host of benefits like lounge access, retail insurance, etc.

#3 Budget your expenses every month.

Another good money habit is to set a limit on how much money you will spend every month. You’ve probably known people who are broke by the third week of every month – don’t be one of them! Set a realistic spending limit after accounting for eating out, recreation, groceries, shopping, etc. Aim to stay within these parameters so that more of your income is saved for other things. This habit will serve you well when you borrow a loan and the EMI cycle starts – you can comfortably juggle your other expenses with the additional EMI payment.

#4 Have a separate fund for travel and recreation.

As a young person, you have the desire to travel the world and meet as many new people as possible. This requires a lot of money, which should ideally not come out of your monthly income. Set up a separate ‘travel fund’ and put money in it regularly. If you have a travel plan in mind, work backwards from the departure date to save up as much money as the trip needs. This fund will keep you focused on saving diligently if you want to make your travel dreams come true.

#5 Make long term investments.

The 20s are the time to embark on the path to future wealth, so that you may consolidate on your earlier moves in your 30s and 40s. Aim to create a diversified portfolio of investments comprising both short term and long term instruments. You have a relatively longer investment horizon, so you can base the instrument tenure to 15 or 20 years for higher growth and lower risk.

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