Your 20's isn't too early to start a pension...
The reality of life in your 20’s is that it’s genuinely very difficult to see yourself as anything other than invincible.
The illusion does eventually break though, usually when something happens to you or someone you know. It doesn’t need to be anything terrible. Simply seeing someone struggle financially could inspire you to make sure you don’t end up in the same way.
When it happens to someone we know it becomes real. Without this reality check, how can we take this stuff seriously when honestly (and it's okay to admit it) it’s boring.
Doing something now, even something super small means bragging rights! While your mates may not be buying the next round of drinks on the back of it, they will be impressed by your financial prowess, even if just “Dammit, they have their s**t together” is ringing in the back of their heads.
So, 7 things to impress your mates in the pub and hopefully help with your finances too.
1. In your 20's you will probably start to finish your first real job and get your first real paycheque. This is usually far more than you ever earned before and with no commitments the money is yours to burn.
This is the perfect time to start good habits.
Would you miss €10 a week? Use it to start some savings, an investment or a pension. You'll get used to it very quickly.
2. Check what kind of protection benefits you have. Some employers offer benefits such as sick pay, health insurance and in some cases Life Insurance. If you are self-employed you may only be able to rely on the state.
Find out what your entitlements are, from employers and from the state. If there is nothing there to cover accident or illness, have a think about how you would be affected. In your 20's and without dependants (that's people who depend on you financially such as children) you probably don't need much, if any.
You insure your car, your holidays, sometimes even your phone, but losing any of them is not as bad as losing your income. Make sure it's protected.
3.
Next, find out if you have access to a company pension. Some companies will add to whatever you decide to invest in the pension every month. If you have this option and you're not doing it (even just €50 a month) it's like giving up free money. It's an easy way to get started with a pension.
If you have no pension option in work, then think about starting one yourself. Investing rewards time as much as it does the amount invested so start early, invest small and reap the benefits of having lots of time to build your pension.
4. Rearrange all you outgoings
to the week after pay day. This is a simple trick but it provides financial clarity and organisation that has to be experienced to be appreciated. Knowing, shortly after payday, and after all the bills/savings etc have come out, that you have X amount of euro to do whatever you want with this month, is priceless.
Gone are the days of feeling guilty over wiping out your savings for a new phone.
5. Know your finances! Simply being confident in what you have makes a difference. Use Life Online to find out about your policies and explore the other parts of the world of financial planning. Most importantly know where your money is going.
There are plenty of apps out there that will help you understand where you are spending your money. If you track it for a couple of months you can begin to understand where it all goes. €100 on coffee last month! What!?
6. It's not uncommon for people in their 20's to take the plunge and move in with their partner, for better or worse. One thing that couples often overlook is the importance of their financial situation and habits.
Bills, rent, even transport costs will all eventually become an issue. Early on, have a talk about your finances and as you can imagine, being upfront and honest about it is the best approach.
7. The rainy day fund
. While you won't need as much as someone with larger overheads and more dependants, it's good to have something to fall back on just in case the worst happens. If you never need it, it will at the very least provide the foundation of your emergency fund later in life.
The generation currently in their 20's, have a unique perspective on the world of money. We were affected by the 2008 global recession in different ways than older generations. How we react to that will define our attitude to finances as a generation.
Use the experience to shape how we deal with financial planning instead of as an excuse to ignore it.