Learning To Budget Better In Your 20s – 7 Top Tips

Last Updated on 12th January 2024

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One thing I’ve always prided myself on was my ability to budget and save money pretty well. Ever since I was incredibly young, I’ve always swayed more to the side of save rather than splurge whenever I received money. Whether it was pocket money from my grandma, Christmas or birthday money from friends and family or even when I got my first job as a pot wash and kitchen assistant in New Zealand, I’ve always been inclined to put my money away and save it.

I was so happy when I earned my first proper pay cheque, that I actually framed the first $5 (NZD) that I ever made! For me, budgeting and saving has just luckily come easily to me, but I’m very aware that it’s not always the case for everyone.

Once I got into my twenties and Matt and I moved into our own place, it was a tad harder to budget because there were so many components and factors of money that we had to consider. Throw into the mix saving for an indefinite trip around the world, and you’ve got a recipe for needing a very strong mind and plenty of willpower when it comes to budgeting.

In today’s post, I want to talk about some of my top tips for learning to budget better in your 20s. I’m by no means a financial expert when it comes to things like this, but I’d like to think that my experiences of saving and budgeting can come in quite useful. Check out some of my tips and advice for learning to budget better in your 20s below!

Have a clear savings goal in mind

One of my top tips for learning to budget better is to have a clear savings goal in mind.

As I mentioned above, I’ve always been good at saving money and that’s largely due to the fact that I’ve always had a clear savings goal in mind.

When I was around 10 years old, I was absolutely obsessed with Bratz Dolls and over the years I must have accumulated over 100 dolls, accessories and merchandise of Bratz. However, one thing I didn’t have but desperately wanted was a Bratz-themed video recorder so that I could make movies of all my dolls, sell the movie and make millions (an incredibly bold ambition, I’ll admit!)…

So, I saved every single penny that came my way; I even convinced my parents to give me “jobs” to do so that I could be “paid” for my work and then put it away to save for my goal.

My point is, having a clear goal in mind of what you’re saving for and why, can really help you to budget better as you know what’s at stake if you don’t quite meet your savings targets.

Take charge of your finances – learning to budget better

While this point might seem quite generalised, it can easily be split into different sections. Firstly, in order to take charge of your finances in your twenties, you need to know exactly what’s coming in and out of your bank account every month.

One way to do this is by creating a budgeting spreadsheet which will hold all the information of your finances, including incomings, expenses, bills, savings etc.

This way, you can see exactly how much money comes in each month, how much you’ll need to pay out and what you’ll have left at the end of it. This figure (income after tax and your personal expenses) is the amount that you’re feasibly able to save each month. However, you may then decide to split that figure in half and put 50% of it into your Lifetime ISA, for example (more on that below) and the rest into a separate and more accessible savings account for Christmas and holidays etc.

Prioritise paying your debts off

I know how unbelievably lucky I am to be able to say this, but I’ve never been in debt in my life. I don’t even have an overdraft availability in my bank account so that there’s simply no chance to ever go into it.

However, the main reason for this is that I didn’t go to university and I’ve never taken out any loans so I have nothing to pay back, apart from my phone contract which is paid every month.

It will be much harder for you to focus on your other financial goals and savings if you have any debt looming over you. Try and pay back any outstanding debts you may have first and then readjust your focus onto your other financial goals such as savings.

Plan for your future – consider opening a Lifetime ISA

This section of the post is an advert in collaboration with The Nottingham. Please be advised that I am in no way a financial expert and I can only offer you my own personal opinions and thoughts. If you’re interested in learning more, please talk to The Nottingham in a local branch or via their social media channels.

One way to budget better in your 20s is to plan for your future by opening a Lifetime ISA.

The Nottingham offer a savings account called the ‘Lifetime ISA’ which can be used to help you save towards buying your first home and for retirement.

You can use your Lifetime ISA to buy your first home (but only if you’re an actual first time buyer*). If you’re aged between 18-39 and a UK resident, then you can open an account with The Nottingham online with as little as £10.

With a Lifetime ISA, you can save up to £4,000 per tax year, every tax year, until you’re 50 and the Government will add a bonus of 25% to your savings, up to a maximum of £1,000 per year.

The Lifetime ISA can also be used for retirement at age 60 (you can keep the account open from when you’ve used it as a first time buyer and continue to get the bonus until you’re 50, then the account accumulates interest until you’re 60 and you can withdraw the money for retirement.)

Make sure to bear in mind that there is a Government charge for ineligible withdrawals from your Lifetime ISA savings account.**

A Lifetime ISA can be a great way to take control of your finances in your twenties and beyond and help you to learn to budget better. If you have an incentive of buying a house in your twenties, then having a savings account and a plan in place that gives you a bonus is a great way to motivate yourself to put money away.

*First time buyer: A first-time buyer is someone who has never owned a property before, including a home outside of the UK. If you’ve inherited a property, or owned a share of one, you will not be classed as a first-time buyer.

**Ineligible withdrawals up to Monday 5th April 2021 will incur a 20% Government withdrawal charge and 25% thereafter, which means you could get back less than you paid in. Full terms and conditions apply. 

Cut back on the non-essentials

Cutting back on your “non-essentials” is one of the best ways to budget better and save more money in your 20s.

Of course, it’s entirely dependent on what you deem to be “non-essential”, but it could be anything from your Netflix subscription (which is definitely an essential in my opinion 😉), to getting your nails and/or hair done at the salon once a month (buy stick-on nails and hair dye from your local Boots or Superdrug instead), to buying a new outfit for the weekend (why not borrow something from your friend?), to going out for tapas (try making your own at home instead).

These little things might bring you joy in the short term, but spending money on them every week, or even every month, will soon add up and could render your savings account pretty empty.

Of course, I’m in no position to tell you how to spend your money, but I would recommend writing a list of “essential” and “non-essentials” items that you spend money on each month and see which ones you could eliminate for a little while so you can get your budgeting in order.

Shop smarter – learning to budget better

Shopping smarter is one of my favourite ways to budget better and save more money and it’s actually something I talked a lot about in my Project 2020 Vision ebook after this Tweet went viral.

That Tweet also led me to writing a post about how I spent just £13 on my weekly food shop, including all my groceries for the week, as well as toiletries and cleaning stuff too.

Shopping smarter can be a lengthy process of finding out what it means to you, but for me, it essentially means ensuring that I’m in control of what I’m spending and making good choices when it comes to shopping.

This could involve a whole manner of switch-ups and habit changes to ensure that you’re shopping as efficiently and budget-consciously as possible. One of the first things that I recommend to people is to think about where you shop. For example, huge supermarkets such as Tesco, Sainsbury’s and Asda are more expensive than the likes of Aldi or Lidl.

While they’ll often claim to price-match, once Matt and I switched from our local Sainsbury’s store to Aldi, we found that we were spending a fraction of the cost on our weekly food shop.

You can also shop smarter by thinking about how often you shop. For example, try to purchase everything you’ll need for the week, just once a week, rather than just ‘nipping’ to the shops every evening to pick up something for dinner on your way home from work. Of course, you might still have to make the odd mid-week purchase of a loaf of bread or some milk, but if you try and do the huge bulk of your grocery shop just once a week, you’re much less likely to buy things you don’t need.

I’ve also included an example below of how you can shop smarter when it comes to meal prepping.

The example below is a very generic example; please don’t think I’m expecting you to just eat homemade sandwiches every single day!

Let’s take the example that you eat a £3 Tesco meal deal every day, 5 days a week. Let’s say you work 226 days of the year in 2020 (366 days – 104 weekend days – 8 public holiday – 28 holiday days = 226), that’s £678 (£3 meal day X 226 days) a year on just your lunch.

Whereas, if you made your lunch at home (for simplicity sake, let’s say a ham sandwich, one packet of crisps and one chocolate bar), you can save so much money.

So: a Tesco loaf of bread (20 slices – 59p), Tesco Honey Roast Ham (16 slices – £4), Walkers Crisps Multipack (24 bags – £3), Dairy Milk chocolate bars multipack (4 bars – £1).

If you split that out into portions per day (2 slices of bread, 2 slices of ham, 1 packet of crisps and 1 chocolate bar) that equals just 93p per lunch meal, which is a total of £210.18 per year.

If you opted to make your lunch at home instead of purchasing a £3 meal deal, you’d be saving a whopping £467.82 a YEAR on just your lunch alone!

Of course, this example is incredibly simplified and you likely won’t be eating sandwiches every single day for your lunch for a year, but working out the maths on a simple example like that, can really show you just how beneficial it can be to shop smarter!

I have more ideas here on cheap, easy and healthy meals to make on a budget.

Don’t forget to treat yourself

While I mentioned above that you should try and cut back on the non-essential spending each month and try and prioritise what you should be spending your money on, that doesn’t mean to say that you can’t treat yourself every once in a while.

Budgeting isn’t all doom and gloom, sitting in the dark, eating Tesco’s own-brand Coco Pops 3 times a day; it’s all about balance.

I’m a firm believer when it comes to budgeting and saving money that you should prioritise your savings goals where possible, but also remember to treat yourself occasionally too. If you put too much pressure on yourself to save money constantly and don’t spend a penny, then chances are you’re going to be pretty miserable and you’re probably more likely to relent and spend unnecessary money quicker.

Even when we were saving for our huge trip around the world, Matt and I still always treated ourselves to date night or drinks out with friends. As long as you remain vigilant and have a clear and concise goal in mind as to why you’re budgeting, then you’ll be absolutely fine.

I really hope you found this post about learning to budget better in your 20s useful and that you found some helpful tips that you might be able to implement! If you have any questions about the Lifetime ISA section of this post, feel free to shoot them over to the guys at The Nottingham who will be more than happy to help!

Related posts:

• 6 Top Tips To Save Money For Travelling
• How Much Money We Spent On A 3 Month Trip Around New Zealand
• How I Spent Just £13 On My Weekly Food Shop
• How Much Money We Spent Travelling NZ, Australia & Southeast Asia
• 9 Ways To Stretch Your Travel Budget Further

Pin for later – learning to budget better

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Do you have any top tips on learning to budget better in your 20s? Let me know in the comments or on Instagram @imjustagirl_16.

If you want to hear more about how I budget, save money for travelling and cut my weekly shopping bill to just £13 a week, check out the Project 2020 Vision ebook; the all in one pocket guide to help you live your best live in 2020 and beyond!

Project 2020 Vision Ebook