Life Stage Series: Money Moves in Your 20s

We believe that financial planning is for everyone, no matter what age or stage of life. Money looks different at every stage of life. Our Life Stage Series breaks down what you need to know – from your 20s to your 60s – so you're always one step ahead.

Let’s get started with your 20s, one of the most financially important decades of your life. You may not be earning much yet, but time is your greatest asset.

Here are some of the smartest moves you can make: 

Get on top of super early

In Australia, your employer pays super at 12% of your salary, but many people in their 20s ignore it completely. Check your fund, consolidate any multiple accounts (according to the Australian Taxation Office, there’s 19 billion in lost super waiting to be claimed) and consider making small voluntary contributions. The compounding growth over 40 years is jaw-dropping – future you will thank you. 

Build the habit of saving not just the amount 

The actual dollar amount you save in your 20s matters less than building the habit. Even saving $50–$100 a month consistently trains your brain and your budget for a lifetime of financial discipline. Set up automatic transfers to your savings on payday – what you don't see, you won't spend.

Avoid lifestyle creep 

Lifestyle creep is when your spending quietly grows to match your income – so even as you earn more, you don't feel any better off. Every time you get a pay rise, resist the urge to immediately upgrade your lifestyle. Redirect at least half of any pay increase to savings or debt repayment before you get used to spending it. 

Tackle high-interest debt aggressively

 

Credit card debt and personal loans can be financially crippling. In fact, according to Roy Morgan, over one-in-three Australian credit card holders rely on credit to make ends meet. Prioritise paying these off as fast as possible – the interest you save is effectively a guaranteed return on your money.

Understand your HECS-HELP debt 

If you studied at university, get familiar with how your HECS repayment works, what the income thresholds are, and how it affects your take-home pay. Don't be caught off guard when repayments kick in. Find out what’s new with study and training loans here. 

Start an emergency fund 

An emergency fund is exactly what it sounds like – a fund for emergency situations like urgent medical care, car repairs or job loss. Start small and aim to save up to three months of living expenses in a high-interest savings account. Having a financial cushion allows you to stay on track with your financial goals and prevents you from going into debt when life throws surprises.

Learn the basics of investing

You don't need to be an expert, but understanding the basics of shares, ETFs and compound growth will serve you for life. Low-cost index funds are a simple, affordable way to invest in a broad slice of the market – rather than picking individual stocks. A great starting point for beginners, it’s simple and naturally diversified.

Live within your means

This sounds simple but it can be genuinely hard in your 20s when the social pressure to spend is intense. The gap between what you earn and what you spend is the foundation of all wealth building. Learn how to say ‘no’ and adapt lifestyle swaps so you don’t get FOMO. 

Protect your income

Income protection insurance is often overlooked by young people, but your ability to earn money is your biggest financial asset. If illness or injury stopped you from working, could you survive financially? 

Get comfortable talking about money

Whether it's negotiating your salary, asking about super or discussing finances with a partner, being able to have open money conversations is a skill that will benefit you enormously throughout life. With financial literacy in Australia declining, it’s vital to build your money smarts now to serve yourself well in the future.

The biggest advantage you have in your 20s is time. You don't need a big salary or a perfect plan – small, consistent steps taken now will put you significantly ahead of where you'd be if you waited until your 30s or 40s to begin.