When you enter your twenties, it’s normal to want to enjoy the freedom of having your own financial independence without having to worry about anything else. Unfortunately, as good as that sounds, you cannot afford to be oblivious to much-needed financial commitments from a young age.

It might not feel like it’s important to secure your future and make smarter financial decisions, but the reality is that the decisions you make today will greatly impact the rest of your life. They will prepare you for any unforeseen events and even the luxuries you’ve worked hard to achieve in your life. Life doesn’t stand still, and you might not see your financial power now or even in a couple of years time, but in years to come, the decisions and planning you commit to today will bring you freedom.

There are a few decisions you need to make in your twenties before you enter your thirties, so here they are:

Pay off some of your debt

In a digital world where everything and everyone is dependent on social media and materialistic elements, it’s easy to go overboard by spending money on luxury items you cannot afford. Often, what you see online, you want to replicate, but you often forget that you cannot afford it. This is the first mindset change you need to make. If you want to survive on your salary, you need to make hard decisions and be realistic about your earnings. If you have, however, found yourself in a situation where you’re faced with some debt, it’s important to limit your entertainment and save that money for debt repayments. As much as you need credit to be able to purchase large assets such as a vehicle, you need to be able to control yourself. For instance, look online for a vehicle finance calculator in South Africa before you purchase a car. This calculator will be able to analyse your earnings and tell you how much you will be able to qualify for when applying for finance through a professional lender. Try not to exceed that amount and put yourself into further debt.

Build a good credit history

Unfortunately, you need credit if you want to apply for an account with your favourite clothing store, purchase or rent a house, buy a vehicle and much more. In order to build an impressive credit score, you need to show your bank and lenders that you are a good customer and you pay your accounts on time. If people see that you pay your accounts late, you immediately look unreliable. You should always pay the requested amount and more. If you already have a poor credit score, you will need to work hard at increasing your score before you apply for anything like vehicle finance or try to purchase property.

Save, save save

While the cost of living goes up, you still need to try and save. You cannot simply live pay cheque to pay cheque without making a plan to improve your financial circumstances. Either you need to cut back on unnecessary expenses or look for another job that can assist you with your financial needs. In your twenties, you need to be able to budget and plan ahead for your future. So, even if you are only able to put away a couple of hundred Rand a month, make a concerted effort to do so. Once you train this into your mindset, you will have plenty of success with saving and budgeting going forward.

Insure yourself for various situations

Next up on the expense list is… insurance. From car insurance to medical insurance, you need to budget for unforeseen life events and experiences that you cannot control. Unfortunately, these are costly expenses but they cannot be compromised on. The older you get and the more dependants you have in your life, the more you will need to look at cover options such as life, disability and more. If you decide to purchase a house, you will also need to look at homeowner’s insurance.

Think about your retirement

Much like saving, investing for retirement is for a greater purpose. Some companies do not offer pension funds or retirement options, therefore it’s important to make sure you are covered for your old age. You should consider looking into investment opportunities where you can watch your money grow over the years. Because at the end of the day, you need to be prepared, financially, for your old age.

Live within your means

Lastly, it’s important to understand the importance of living within your means and not overspending on items or accounts that you cannot afford. It’s so easy to become caught up in debt by applying for vehicle finance in South Africa to buy a car you can’t afford. You might even choose to buy a vehicle during 2018 with a finance interest rate that you won’t be able to pay for. But eventually, everything is going to catch up with you. Spend money on what you can afford.