Many people aspire for a secure financial future but they do not think of taking important present decisions to make it a reality. Are you aware that the financial decisions that you make in your 20s have a serious impact on your future? The sooner you understand that you need to start securing your financial future by making present decisions, the brighter your financial future will be.

Your living cost

Your spending habits play a huge role in what financial position you are going to find yourself in the future. Decisions relating to where you live, what food you take as well as what recreations you engage in all have their respective impacts on your present income. When you spend too much on these things, you are left with little or nothing to plan for the future.

Choice of college

Every young adult wants to go to a very nice school. Some decide on enrolling in high-fee paying schools simply because of the availability of some student loan. They forget so soon that they are going to pay back every dime collected as student loan when eventually they start earning money. The consequences of exploiting student loans last for a long time if care is not taken. Not to talk of the ones who enrol in private colleges.


Many young adults do not put in place proper budgets when they are in their 20s. they forget the fact that without budgets, they are often at the mercy of overspending their resources on frivolous and discretionary items. This, in turn, handicaps them from embarking on any form of savings or investments. There is a need to identify your needs and wants. It is important to establish a daily expense plan so that you can follow up on how your finances are disappearing.

Building an emergency fund

While insurance is a good way of ensuring some future financial stability, it does not cover all aspects of your problems. It is just as important to establish savings for the rainy days. As you enter into your 20s, endeavour to earmark a significant portion of your income to be tucked away into an emergency fund that you can access in future when things go awry.

Establishing a retirement savings

Many young people still see retirement as a future that is very far away. This mindset results in procrastinating on when to start a retirement savings plan. However, retirement savings should be established as soon as one starts to earn income. The reason for this is simple; the concept of compounded interest fattens your retirement kitty the same way yeast does to the dough. Retirement savings should be perceived as future automatic payments for gratification delayed.

Credit Score

While in your 20s, you have the option of taking credits. However, there is a pitfall. Your credit score is not just for the present; it goes with you anywhere you go. If you don’t take the credit, you have only succeeded in recording a zero credit score for yourself. By taking credits and repaying at due dates, you are showcasing yourself as someone who knows how to manage his finances. This is how you build up your credit score. Don’t forget that a good credit score means you have access to low rates on credit cards and loans.

One thought on “Why your 20s are crucial to your financial future?”

Leave a Reply

Your email address will not be published.