Five Savings Habits to Start in Your 20s

If you’re in your twenties, you’re most likely in one of two camps when it comes to your finances.

The first is reserved for those who make a semi-regular vow to themselves that they will ‘save later’; after all, if you are well and truly in that camp you are probably too busy enjoying some extra spends from your first proper, full-time job.

Alternatively, you might be stretching your student loan as far as possible. Saving often falls by the wayside when you have digs to pay for and multipacks of beans to buy.

Those in the second camp might already be putting aside their hard-earned cash into a savings account, ready to buy their first property. Or perhaps you’ve been putting some money away for driving lessons, or to go travelling.

Whatever your stance on saving in your twenties, you can always do more to set yourself up for a healthier financial future. Read on, then, for Unity Mutual’s top five ‘savings habits’ to start in your twenties.

 

Create an Emergency Savings Pot

 

When you were younger, you probably had a piggy bank with a few coins stashed away for a rainy day or a new toy. There’s no reason why you shouldn’t have a little pot of cash now – you know, ‘just in case’.

Whether you’d like to eventually take driving lessons, or you’ve already passed your test and would like to have enough money set aside for essential car repairs, an emergency savings pot makes perfect sense.

Put aside a small amount each month and before you know it you’ll have a nice little sum to fall back on when needed.

You could commit to putting aside, say, a £1 a week – giving you £52 at the end of the year. It may not sound a lot, but that’s your handy, pre-Christmas fund to buy last-minute presents or pay for a couple of nights out.

Or why not set yourself a larger goal to save, for instance, £5 per week? You can then watch your money grow from there.

 

Budget!

 

Learn how to budget – or find an app that will make the process even easier for you – and you’ll be saving money without trying too hard. The Guardian rounds up some handy money saving apps in this piece, including the free app, Money Dashboard, and Emma, which offers a basic version at no charge, too.

Money Dashboard has customisable categories to help you manage your spending. For instance, you could group together any money you spend each month on meals out, which will give you a handy overview of where you might be overspending.

Emma works in much the same way, analysing your savings, current accounts and even credit cards to give you a clearer picture of where your money is going on a monthly basis.

By using one of those apps – and there are lots more like those available, too – you may be able to easily work out how much you can feasibly put to one side to save, and how much you have left to spend as you wish.

 

 

Set Up a Lifetime ISA

 

It’s never too soon to think about saving for your very first home. Whether you already have some money put to one side or you’re in no position to apportion any of your wages to getting on the property ladder, a Lifetime ISA could prove helpful.

At Unity Mutual, our Lifetime ISA (or LISA) offers a market-leading interest rate* as well as helping you get ahead when it comes to saving for a house deposit. You can save any amount over the year and the government will top it up by 25% every 12 months.

The idea is to encourage first-time buyers to take their first, tentative steps towards getting the keys to a house or apartment – and the money in your LISA must be used towards a home or retirement.

Just make sure you understand all of the rules surrounding the LISA’S such as government withdrawal charges if you access your money for anything other than your first home. Like any financial commitment, it’s important you enter it with your eyes open. 

 

 

Build Up a Good Credit Score

 

Want to eventually take on a mortgage? Staying out of debt – and building up a good credit score in the process (if for example, you pay for your car on a monthly basis) – will stand you in good stead.

Again, The Guardian has plenty of advice, thanks to this article, which focuses on everything from tackling debt which may accumulate as a result of borrowing money.

Tips include building a budget and sticking to it, and prioritising and sorting out any debts.

 

Set Up Clear Savings Goals

By setting up clear savings goals like saving for your first home, a dream wedding or house renovations – you may be much more motivated to save regularly.  Whether they’re long or short terms goals. 

The pandemic has made some people nervous about locking savings away as you never know when you might need to dip into them, but there are options available.  For example the Unity Mutual Flexible ISA is a tax-free savings account that allows you to pay in or take out as much money as you like – and when you like. Unlike savings accounts that pay regular interest, this account invests in the stock market, with the aim of giving better growth over the long term. Of course, the stock market can go down as well as up.  This might suit you if you want to see growth but also need flexibility – it allows you to get hold of your money or pay in more whenever you want to.

Have you made a note of any of our top tips – and do you have a question or two about Unity Mutual’s financial products, including the Lifetime ISA? If so, do not hesitate to contact our friendly team, who will be more than happy to help. Although they can’t offer you ant advice, they can answer your questions and talk you through the Terms and Conditions of any of our products.

 

*Independent research conducted every six months. Data correct as at 1st October 2021