8 Things You Need to Know about Money before You Reach 25 ...

1. 50/30/20

Have you heard of the 50/30/20 rule? It means that you should spend 50% of your salary on essentials, like rent, insurance and bills, 30% on groceries, entertainment and anything else that is non-essential, and 20% should go into your savings. It’s a little idealistic, because it presumes that it’s possible to find somewhere to live that doesn’t take most of your money, and that your insurance is cheap, and that your bills are predictable. It’s definitely something to aim for, though. You can’t beat it, if you can get there.

2. Certificate of Deposit

Do you know what a Certificate of Deposit is? Or a CD, as it’s commonly called in the finance world? It’s a saving method that everyone should know about. In short, you give the bank some savings, which you then cannot access for a set period. By lending the bank this money, you make a profit. The amount of profit that you’ll make will depend on how much money you can “lend”, and how long you can lock it in for, but it’s worth it even for small amounts.

3. Picking a Reward

Need a credit card? It’s not the end of the world, but you need to pick one that suits you. Most cards have a reward scheme, which helps you to actually benefit from using one. Some offer rewards based on purchases, like groceries, and some are based on travel mileage or flights, or even a particular type of spending, like entertainment rewards. Take a look and pick one that will actually benefit you. If there isn’t one, see if you can find a card with a lower APR or other great offer to make it worthwhile.

4. Look for Offers

Okay, so we all say it, but you really should do this before every purchase. Use sites like RetailMeNot to find bargain clothes and food, check SkipLagged before you book any travel, and SlickDeals is an essential before buying any technology. Even hit Google before you order a takeaway – places like Domino’s and Papa Johns tend to have voucher codes that could save you a fortune.

5. Keep a Diary

Okay, so this will be time-consuming, but it’s so worth it. Carry a small notebook and pen around with you. Write down everything that you buy. That includes coffees, snacks, clothes…everything. If it costs you money, it goes in the book. You’ll be able to identify EXACTLY where your money is going. I promise you here, you’ll find some secret spending habit that you never would have guessed cost you so much.

6. You Need a Pension

Yes, really. Retirement might feel like light years away, but if you don’t want to be poor when you're older, you need a plan. When you hit 25, you’ve got around 40 years to save, which should hopefully be enough that you don’t need to keep working. There is social security to help you out, but it’s usually a very low amount, and nobody wants to live in poverty in old age. Stand on your own two feet, and start planning now.

7. You Need Insurance

Yep, this one is very similar. If you’re driving a car, you need car insurance. If you own things, you need home insurance. And if you’re alive, you need health insurance. It’s a pain to pay it, especially if you haven’t needed to use it in a while, but not half as much as it’d hurt if you need help and can’t afford it. And the universe has a way of teaching us these lessons in a pretty harsh way….pay that insurance.

8. Be Happy

Finances are stressful. There is always a need for more money, regardless of how much you have. Make a plan, and know where you stand with your finances. Then stop stressing about them. Honestly. It’s not worth losing years of your life to worry, when it won’t make a difference anyway.

Of course, if you are feeling really lost when it comes to money, there are things that can help. Speaking to a financial advisor will help you find the best accounts for you, and give you a set plan for the future. Community finance colleges can teach you the basics, and an Excel spreadsheet can make things seem clearer! Just make sure you’re on top of your game. Do you worry about money?