Managing money in your 20s – Where should I start?


Wade Hoal

Head of Wealth Creation

Getting started on sorting out your personal finances is an overwhelming task. There are so many life transitions that will have financial impacts on us in our 20s. To name a few: finishing university, starting a new job, earning our first paycheque, buying our first apartment, and if we were lucky enough to find love early on, getting married. Apart from feeling overwhelmed, it’s difficult to know where and how to begin and who to seek advice from.

While we are young, it’s important to start building solid financial habits:

  • Pay Yourself First – you are the centre of your financial affairs, so that means you should always invest and pay yourself first. As Warren Buffet says: “Do not save what is left after spending, but spend what is left after saving”. Set a goal to save 10% to 20% of your income each month to put toward your long-term priorities.
  • Create and stick to your spending plan – one of the simplest, yet most admin intensive tasks (from my own experience, even though it took me less than 20 minutes) was to create a spending plan. It’s a very powerful tool that allows you to see what’s coming in, what’s going out and enables you to manage your cash flow accordingly. This should be reviewed at least annually, or when a big item has been added or subtracted.
  • Create an emergency fund – save and put away three months’ worth of expenses into an easy-to-access account, so that you’re prepared if disaster strikes. Don’t be discouraged if unexpected expenses force you to tap into this fund, that’s what it’s there for. Much like our spending plan, the goal amount shouldn’t be static. It’ll rise or fall as your circumstances change.
  • Protect your wealth and your health – never say never, tragedy can strike anyone at any time. It is important to have enough cover in place, but to not be over-insured. Ultimately, your current circumstances will determine what cover is needed, but as a minimum, you should have income protection (disability cover), medical aid, and gap cover in place.
  • Build a healthy credit score – building and having a good credit score, will allow banks/institutions to grant you a loan at a lower interest rate when you need it. To start building your score, pay back the full amount due on your credit card, store accounts and cell phone contract every month and on time.
  • Start saving for RetiremeantTM – I know RetiremeantTM seems like forever from now. However, it’s more important than ever for us to focus on this investment goal as soon as possible, and ensure we have exposure to growth assets, such as equities, offshore and property. This positions us to beat inflation over time and not go backwards in real, purchasing power.

As with all things in life, these habits may seem overwhelming at first but will become easier and easier as and when we get more familiar with them, and it is essential to get them in place as soon as possible. I think Benjamin Franklin said it best, “If you fail to plan, you are planning to fail!”.


Kim Potgieter and Wade Hoal, Head of Wealth Creation at Chartered, discuss the importance of managing your money in your 20s.
Johannesburg Office
Tel: +27 11 502 2800
Eastern Cape Office
Tel: +27 41 001 1026
Western Cape Office
Tel: +27 21 001 0048
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