Personal finance is the management of monetary resources at an individual level. The activities of making a budget, analyzing the sources of income, planning the expenditure and saving a certain amount over time, helps in the management of personal finance.

The sooner one starts making a financial plan, the brighter their future ought to be. Thus, you must begin financial planning from the starting of your career.

Building investment habits, especially in your twenties is very important for long term success. Many youngsters are not adequately prepared to handle their finances due to poor money management.

12 Personal Finance Hacks Every Twenty-Something Needs To Know

So, here are the things youngsters in their twenties should learn about personal finances:

1.Develop skills


Before you start to worry about what to do with your finance, one should earn some. Learning, developing and experimenting helps a person to gain an edge over their career.

It is important that you have a specified plan about how you will raise your financial worth. It could be through investing, or even through a steady income.

2.Preparing a Budget


A budget is simply a list of costs that one expects in their financial endeavors. This helps to prevent over spending and saving more. When one knows where they are spending, it becomes much easier to cut costs.

For Example,you earn ₹20,000 a month, your expenses include transport, food and other miscellaneous costs. If you prepare a budget, you can analyze how much you exactly need to spend for each  of these expenses and allocate your cost accordingly

3.Invest in Health Insurance


One should always keep oneself protected from unfortunate situations. Being an adult, it is a necessary requirement to keep yourself secured.

So, even at the initial stages of earning, health insurance becomes a necessary investment. Uncertainty is an uninvited guest and it is our responsibility to adopt the needful practices.

4.Debt Repayment


Debt is a reality for most young adults. Without having a plan, it becomes a difficult task to pay off a debt. It will increase your burden in the form of greater interest and low credit score.

It is better to plan your investments in a way that you do not need to take a loan in the first place and if you do, because of an emergency, you have made a systematic plan to repay it.

5. Create an Emergency Fund


An emergency fund is a fund for unforeseen financial requirements. An insurance alone is not enough to deal with unexpected scenarios.

An emergency fund can save you from a host of tricky situations and proves to be an asset. Ideally, you must keep at least  3-5% of your salary in an emergency fund.

6.Saving for Retirement


Even though retirement seems like a faraway entity, it is something which is certain to happen. Thus, one should invest in retirement plans.

Another reason to do so is that it works using compound interest which ensures that money grows at an increasing rate. In fact, your mantra for retirement saving should be, “Save early, save now”.

7. Maintaining Financial Documents


It is necessary to have a list of all your banking accounts, investments, bills, insurance policies and the supporting documents.

Being a young adult, it is your responsibility to maintain your records in a systematic way. This helps to avoid fines, delay in payments and helps in various other documentation purposes as well.

8. Setting Financial Goals


One should create financial goals with targets and methods to achieve that target. It is better to have a specific and detailed set of goals by differentiating the short-term goals from the long-term ones.

Once you have set your financial goal, you can work towards achieving it and keep monthly, quarterly and yearly milestones which you can use as a comparison.

9. Prioritize Your Expenses


You should have a clear understanding of your financial needs, wants and targets. Your expenses should be categorized in a proper manner and the income should be distributed accordingly to lead a satisfying life.

Remember, it is important to save, but it is also important to live a life of your choice. One need not be frugal to prioritize their expenses in a phased fashion.

10. Tax Planning


Your savings should be invested in such a way that it fully and efficiently utilizes all the benefits provided by the government.

This will help an individual to comply with the all the laws and regulations to avoid payment of penalties.

11. Being Financially Motivated


Practicing personal finance, takes a lot of effort and discipline.

Motivation plays an important role to keep focus on the financial plan. Setting financial targets and creating a path to reach those milestones helps to maintain a clear vision for a stable financial future.

But how will you stay motivated? Always keep your goals high. It doesn’t matter if you don’t earn as much as your friend.

A wise financial decision can be a boon for you in the future. the trick is to not quit the game before it ends.

12. Analyzing Interest Rates


You must be updated on the returns which the investments are fetching. This helps to take various decisions on the amount and time period of investment.

It also helps to accomplish the set targets, by analyzing different investment schemes on a regular basis and taking the necessary actions.


Saving money may seem like a hard thing to do – especially if one doesn’t have a lot to start with.

But even a single penny can contribute to a steady financial future. Saving can help you make big changes in your life and it is high time that we all start saving adequately for a secure future.

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and not those of Groww