Four Money Goals To Meet In Your 20s

From taking a long holiday to creating an investment portfolio, meeting these money goals can help young Singaporeans learn important money lessons.

Listen up, we’re about to drop a truth bomb on all you young, tender 20-somethings out there.

While you’re busy enjoying your most carefree days, free from all the bills you’ll never believe you’ll need to pay, you should be learning all you can about money.

Yep, it turns out, the halcyon days of youth are best used for learning important money lessons. It is much better to learn how to manage what little money you have right now, before you’re hit with the full weight of juggling a mortgage, children’s expenses, holidays, credit card payments and retirement savings - all on a paycheck that never seems quite large enough.  

Youth may be wasted on the young (according to those bitter old coots), but financial education need not be. Challenge yourself to meet these four money goals to equip yourself with the financial skills and knowledge you’ll someday need.

Take a 10-day Holiday

Look, budgeting is an essential skill that everyone needs to learn, so why not learn it while doing something fun?

Sure, anyone can easily budget for a weekend food binge in JB, but where’s the challenge in that? Aim higher - plan and budget for a 10-day odyssey in your top holiday destination.

The objective of this goal is to book yourself a luxurious getaway without getting into debt. That means that your holiday should be fully paid up, with no credit card bills or loan payments to worry about after you step off the plane at Changi Airport.  

The challenge here is to manage a big ticket item without messing up your finances. Yes, using your savings is a perfectly good choice, but paying with plastic can reward you with credit card perks like air miles. (Besides, your savings might be better used to seed your emergency fund.)

So, if you don’t have the money on hand, you’ll have to wait till you save up the amount you need.

Or, you could book your trip in stages, possibly paying off your air tickets first, then booking your accommodations a few months later.

In any case, you should be researching alternative options in order to fit within your budget.   

Why go to all that trouble, when you could just use your card first, and pay off what you owe later?

Because that’s the ‘wrong’ way to use your credit card - you’d be paying interest charges for nothing! And also, learning how to budget lets you afford nice things, without necessarily paying high prices.

Maximise Your Credit Card Rewards

Whoa, whoa, whoa… is it wise to be asking YOLO young people to use credit cards - financial tools that have been proven to cause you to spend more?  

Yes, it is. Because the sooner young people learn how credit cards work, the sooner they’ll be able to get a grip on their finances.

When you’re in your 20s, the amount of money you earn is probably still quite low, which means your credit card limit is not going to be that high. This means that any missteps are far less likely to turn into unmanageable financial disasters.

So, make one of your money goals applying for a credit card, and maximising your rewards from it.

For example, some cashback cards offer generous savings, but you’ll have to satisfy a minimum spending amount. How can you shift more of your everyday spending onto your card, so you can reap the maximum rebate each month?

Or, see if you can pay for your next flight out using only air miles. What promotions and offers can you use to rack up enough miles?

(Slow and steady is the key here. Start with one credit card first, and give yourself six months to a year to master the ins and outs of this card. Afterwards, you may add on more cards, or switch to other card types.)

End the Year S$10,000 Richer

Pick a year, any year, and tell yourself and everyone you know you’ll be S$10,000 richer by 31 December. (Don’t include things like your year-end bonus, dividends, winning TOTO, inheritance money and other unexpected windfalls.)

You can choose any method to achieve this goal: Scrimping and saving, giving up expensive weekend drinking, taking on freelance work, etc. It doesn’t matter how you do it, it only matters that you do.

The point of this goal is to challenge yourself to get outside of your comfort zone and learn how to generate the funds you want or need. When you repeatedly succeed in doing this, you’ll have built up the necessary habits, network of contacts and mindset to increase your income, virtually at will.

This is a very powerful thing to know about yourself - once you do, you will never again feel frightened or lost when life throws you a curveball. Neither will you fall prey to “easy” solutions, such as high-interest loans from moneylenders.

Once you’ve succeeded at gathering your first S$10,000, you’ll likely not want to stop. And such an appetite can only be advantageous.  

Create Your Investment Portfolio

Between time and money, which would you say is more valuable?

Well, any savvy investor will tell you that time is more valuable, because while you can use time to grow money, money cannot grow without time.

In practical terms, this means you should start your investment portfolio as early as possible. The longer you keep your money in the market, the more your money will grow, thanks to the power of compounding interest.

This means that all things being equal a retirement nest egg started 30 years ago will do better than one with a 20-year lifespan - you already know this. But what you may not know is how much difference 10 years can make.

To illustrate: S$200 invested per month at 5% per annum will give you approximately S$80,000 after 20 years. At the end of 30 years, you’ll be getting around S$160,000.

In this case, starting 10 years earlier gives you double the money!

Inspired? Good! But don’t worry about investing half of your salary at the get go (and starve yourself in the process.) Instead, put in what you comfortably can, and make plans to increase your investments over time.

One more reason to start investing early. Although the ultimate goal of investing is to provide for your retirement years, your investments can also fund more immediate needs.

Start investing in your 20s, and you’ll have at least some funds for a wedding, or the downpayment for a house, by the time you hit your 30s.

(Before investing your money, always speak with a qualified financial adviser or investment banker to understand the risks involved, and help you put together an investment portfolio.)

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By Alevin Chan

A Certified Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimize happiness and enjoyment in his life.