With an increasing number of millennials graduating with the financially crippling burden of student loans or the ephemeral incomes of the gig economy, it’s more important than ever for those in their 20’s to learn what to do with their money and put in place some smart financial strategies.

Many financial commentators preach the gospel of starting to save as early as possible. Naturally, for those millennials, your 20s is the perfect time to save and put in place the financial foundations for your future.


Time Will Not Always Be On Your Side

In your 20’s, you can take advantage of the cumulative power compound interest for longer than if you started saving later in life when you are likely to have more financial responsibilities that accompany having a mortgage, kids or a demanding career.

By the time you turn 30, you should have some insights and know-how as to how to manage your finances. The first place to start is to use one of the many expense tracker apps on the market to set up a monthly budget. This not only gives you a sense of where your money goes but also will identify areas of potential savings.

So what other steps can you take to become smarter with your money before you turn 30? Here are 10 savvy practical tips to set you on the path to financial freedom:

1. Set Financial Goals

Ok once you hit 30, the end is night but you still have some living to squeeze in before being overwhelmed by a zombie apocalypse and that lifestyle will need funding.

Set out some clear, specific, and realistic goals. This will enable you to do better for yourself and ensure a comfortable future unless you plan on delivering pizza into your 90s.

Creating both short and long-term goals will make your money go to work for you. Smarter financial decisions will help on the path to true financial freedom.


2. Reduce Your Expenses

Living pay to pay is not living, it’s existing! Living beyond your means is never a sustainable strategy. Review your expense manager and develop a doable monthly budget.

Making extravagant or unnecessary purchases because you anticipate having “money coming in” is a terrible way to responsibly manage your money. Your expense manager will highlight areas where you can cut back.

So, brace yourself and say “Goodbye” to smashed avocado on toast breakfasts in trendy cafés and say “Hello” to bringing your lunch most days from home!

In particular, spending money that hasn’t made its way to your bank account is a dangerous, way to play with your hard-earned cash.


3. Pay On Time And In Full

Rolling over your monthly outstanding credit card balance is effectively making a deal with the devil. Paying high monthly interest charges on credit cards is one of the most obvious places to start changing your financial planning habits.

Making your payments on time avoids those hideous late fees while paying your monthly balance in full will save you oodles in interest payments you can repurpose to either pay down those student loans or to build up a nest egg.


4. Start An Emergency Fund

An emergency fund is a pool of cash or assets that can be easily liquidated if you are faced with an unexpected event or financial emergency.

Your emergency fund should enable you to live for several months if an unanticipated event arises that demands access to ready cash reserves.

This may include losing your job or incurring unexpected car, medical or household.


5. Diversify Your Sources Of Income

In the age of the online retailing and the gig economy, having multiple streams of income outside your main day-to-day job can help you retire debt faster, save more and contribute more to your retirement fund.

Diversifying your income streams enables you to reach your financial goals faster while reducing your economic risk and sector exposure during turbulent economic times.


6. Educate Yourself On Investment Options

One of the reasons financial advisers strongly recommend a saving plan is to accumulate sufficient excess cash to meet both short-term goals and to provide funds to invest for the future. In turn, these investments will eventually generate income for you to reinvest over the longer term.

One of the first potential investment avenues to explore is the stock market. Today, there are a plethora of financial and personal finance websites offering information and insights which make it easier to invest in stocks.

Similarly, you can do basic courses on investing in stocks to enable you to start with a solid background in the stock market. Look to invest wisely, managing your exposure and consult with a licensed financial advisor for professional advice.

The other mainstream investment area is property. Australia’s national obsession with home renovations and homeownership means there is plenty of advice out there on how the property market works.

Saving for a deposit and investing a percentage of your surplus savings into a property is another savvy option for maximising the value of your savings in order to achieve financial independence.


7. Come To Grips With Superannuation

Having a superannuation fund is ground zero for savvy use of your money. Look for an industry super fund with low fees. Even if you start slowly and gradually build up your contributions, the power of compound interest and the tax-friendly treatment of superannuation will provide you with a reliable income in your retirement. Use this time to understand the rules around superannuation and look to invest in options that help your money grow.


8. Invest In A Financial Education

In your 20s are the perfect time to gain an education in investing and all things finance-related and fined a model that works for you. Expand your skills and learn new approaches to managing your personal finances. Read books on finance topics, watch webinars or listen to podcasts about personal finance topics which will help alert you to emerging investment opportunities, while growing your understanding of markets and investment niches.


9. Get Insurance

In your 20s you may feel immortal but statistics show this is a dangerous time for accidents and injuries. Whether its health insurance, income protection or contents insurance, insurance represents a financial backstop in case of a calamity.

Insurance may represent an additional monthly expense but not having insurance could potentially cost you much, much more.


10. Tap Into Personal Finance Expertise

There is a wide range of resources available on the Internet or in books on a host of personal finance topics, covering what you can do with your money when you are in your 20s. Ask people who have knowledge and expertise in investment products you may be interested in and always research potential investments ahead of actually committing funds.


A Final Observation

One final smart thing to do while you are still in your 20s is to understand your personal worth. Go over your net worth with a financial advisor and see how that maps against your financial goals and saving or investment strategy.


Do you have other tips on savvy things to do with your money before you turn 30? Share your ideas in the comments section.