Essential Skills for Managing Money in Your 20s

Your 20s can feel like a whirlwind—university, first jobs, moving out of home, travelling, maybe even starting a side hustle. While it’s easy to focus on the excitement and freedom, this decade is also a crucial time to lay the foundations for long-term financial wellbeing. Developing strong money management skills early on can help you avoid common pitfalls and set you up for a more secure future. Here are some essential skills to master when it comes to managing money in your 20s.

Understanding Your Income and Expenses

The first step to gaining control over your finances is knowing exactly where your money is coming from—and where it’s going. Whether you’re earning a salary, casual income, or juggling multiple streams of work, tracking your income helps you budget realistically. Tools like budgeting apps or even a simple spreadsheet can give you a clear snapshot of your financial position each month.

Creating a Budget You Can Stick To

A budget is not about limiting your fun—it’s about empowering your choices. Allocating your income across essentials (like rent, groceries, and bills), savings, and discretionary spending allows you to enjoy your lifestyle without financial stress. The 50/30/20 rule (50% needs, 30% wants, 20% savings) is a popular and simple starting point.

Building an Emergency Fund

Life is unpredictable. Whether it’s a car repair, medical expense, or a sudden job change, having an emergency fund gives you a financial buffer. Aim to save at least 3–6 months’ worth of living expenses. Even small, regular contributions add up over time.

Learning the Basics of Superannuation

While retirement might feel lightyears away, understanding your superannuation now can make a massive difference later. Check what fund you’re with, understand the fees, and consider consolidating accounts if you have more than one. Keep an eye on your employer contributions, and if possible, make voluntary contributions to give your future self a boost.

Avoiding High-Interest Debt

It’s easy to fall into the trap of credit cards or buy now, pay later services, but high-interest debt can quickly spiral out of control. Try to pay off credit cards in full each month to avoid interest, and think twice before committing to unnecessary debt. If you do have loans or debt, focus on repaying the highest-interest ones first.

Setting Financial Goals

What do you want your money to help you achieve? A car, a house deposit, travel, or starting your own business? Clear financial goals give your savings a purpose and can help you stay motivated. Break large goals into smaller milestones so they feel more achievable.

Improving Your Financial Literacy

Your 20s are a prime time to build your financial knowledge. Podcasts, books, online courses, and government resources like Moneysmart can help you understand investing, taxes, insurance, and more. If you’re starting your career, it’s also worth learning how to support employee growth through financial education in the workplace.

Being Smart with Lifestyle Choices

It’s tempting to keep up with your peers—brunches, travel, concerts, and shopping—but financial wellness often means making conscious trade-offs. It’s okay to treat yourself, but try to avoid lifestyle inflation, where your spending rises every time your income does. Instead, use income increases to grow your savings or reduce debt.

Final Thoughts

Money management in your 20s isn’t about having it all figured out. It’s about building healthy habits, gaining financial confidence, and setting the groundwork for a stable future. With the right skills and a proactive mindset, you can enjoy the freedom of your 20s and make smart choices that pay off for decades to come.