The 20's are an interesting time for men - you've just left your teenage years, you're considered a young adult, and you're expected to become more and more self-sufficient as time goes on. It's an incredibly exciting time because the options and possibilities seem endless - you get to go out and build a career, live by yourself, go where you want, date whoever you want, and more. There's just one problem - you lack the money. Very soon that imaginary thought of you living like a successful bachelor comes crashing down as you start to wonder "how can I afford all this and still build my financial wealth?".
There's an endless amount of material out there convincing young men that they need to do this, buy that, or behave in certain ways in order to be considered a success or a "real man". Needless to say such a standard cannot be financially maintained easily by any normal young adult and simply appeals to their more impulsive natures. But for young men who truly want to build their financial independence there are a few key areas that they can focus on, and with a couple of tips in each they might find themselves getting the results but for just a fraction of the costs.
1. Building your base
Your base represents the bare necessities in life that you need to survive. For example you need a roof over your head, you need to pay the bills, and you need to eat. The basics of life.
This part of your budget is going to - at the start - take the bulk of your income, and the aim is to keep it at or below 50%. If you're coming in higher then it's not the end of the world, but you'll want to be making some smart financial moves to get things in line lest you be stuck in an endless cycle of living pay check to pay check.
1.1 Split the costs of living
If you're anything like I was when I first started out on my own you might have illusions of living in a big pad with plenty of space, cool furniture, lots of gadgets and slick manly decoration oozing with masculine style.
You'd be located in the posh area of the city and would throw awesome parties for everyone, or you would woo your next date by bringing them home and finishing off the night with a whisky on the leather couch before moving onto... other things.
While I can totally see the allure of living a successful bachelor life like it's presented in the movies your money is probably better spent on things that are a little more down to earth and in line with reality.
As a young guy you don't need an entire place to yourself and you don't need to have paid subscriptions to every type of service available. You're also quite capable of commuting so living a bit further out should never be ruled out when looking for your next pad.
It's not as glamorous as the original illusion but it's certainly more cost effective, and nothing to be ashamed of.
Here's 3 money tips:
Sharing a place to live with 3 other people means you pay considerably less each month on rent.
If you can get to work within 30 minutes by cycling then it's not too far away to live.
Subscriptions to 3 different services or channels is more than enough.
1.2 Pick up some cooking skills
I'm sure there's plenty of guys out there who have some decent skills in the kitchen but I feel this is a huge area in a young adult's life where they can make some serious savings - so it can't be overstated.
If we crunch some example numbers - a take away for one person could cost between £10 to £15, while eating out at a restaurant would easily cost over £25. If you grab lunch from a deli or a café it's at least £5.
Even if you're sticking with a Tesco meal deal it's going to cost you a few quid.
Obviously it depends where and what you're eating but let's say a guy who doesn't cook spends on average about £25 a day on food, after you've factored in all the snacks, drinks, and maybe the bacon sandwich in the morning.
That's £175 a week, or over £750 a month on average.
If you learn to cook and get familiar with shopping for basic groceries you can easily get your costs down to around £5 a day, without skimping on nutrition or portions. But even if you up the budget to £10 a day, that's a saving of around £450 each month or £3,000 each year.
Here's 3 money tips:
Learn 3 go-to recipes that are cheap and easy to make but delicious and nutritious.
Bulk cook your meals so that there's enough for the next 3 days, and eat them for lunch and dinner instead of ordering out.
Non-homecooked meals should be kept to a maximum of 3 times per week.
1.3 Pay down your debts
After you've made sure you've got a roof over your head and have food to eat, the next most important thing is to make sure you're not bleeding away your money through interest that's racking up on your debt.
Guys might find themselves in debt for all sorts of reasons - perhaps they've gone through (or are still going through) education and have taken out a student loan, maybe they got a car on finance, or maybe they went out clubbing a little too often and put it all on a credit card.
No matter what the debt or how you got into it, you have to stay ahead of the payments and get them cleared. If you don't you could quickly find yourself in a world of trouble when it comes to your finances.
Once you clear your debts, don't get back into any new debt!
There are obviously exceptions - such as getting a mortgage for a home purchase - but this is generally a good rule of thumb to follow. If you can't afford it, don't buy it.
Here's 3 money tips:
Any debt that has an interest rate of more than 3% must be dealt with as soon as possible.
Under most circumstances debt is the third item you should be putting your money towards, after housing and food.
Cut your budget for non-essential spending by a third and redirect it towards your debt.
2. Plan ahead
Now that you've built your base it's time to direct your attention to thinking about the future.
Being a young man and/or a bachelor is fun and you should try to enjoy it - sensibly - while it lasts, but it's not the life you want to live forever. Eventually you're going to want to take things to the next stage and get involved in some bigger life projects.
This part of your budget should take between 20% to 30% of your income and the aim is to raise it as much as possible - within sensible reason - whenever you find yourself earning more money.
2.1 Set aside some cash for emergencies
Younger men, notably "bachelors", tend to be imagined under a certain stereotypical image - fun-loving, easy-going and care-free. They tend to live life in the moment and enjoy it, and tomorrow's problems can be dealt with the day after.
While there's nothing wrong with some of these traits you certainly don't want to be someone who isn't well-prepared financially.
To be honest you probably don't want to be unprepared non-financially either... but this is a financial blog so we won't dive into that.
Life is full of surprises, sometimes good but also sometimes bad. And regardless of how care-free you might be you can almost be certain that something at some point in the future, no matter how far, could happen which is going to cost you money.
So start setting aside some money for those emergency expenses. It could be anything that's unexpectedly going to put you out of pocket - the car breaks down, your landlord doesn't return your deposit, you get in a fight and end up needing to pay compensation.
Or maybe you find yourself out of a job for a little while (maybe because of that fight... ).
Whatever the reason, having a bit of cash set aside for these things is going to make dealing with them a hell of a lot less stressful.
Here's 3 money tips:
Keep 3 months of income ready for any emergency.
If it doesn't need to be resolved within 3 weeks, it's probably not an emergency so don't use those funds. Find another solution instead.
If you can't access the emergency fund within 3 days then it's not kept in an appropriate account or location to deal with an emergency.
2.2 Invest for the future
Regardless of the life you want to live you're going to need to put some pieces in place to ensure your future is financially secure, which means you're going to need to do more than sacrifice around 3% of your monthly salary into a pension fund.
Saving money is sensible, but only to the point where it means you're not spending more than what you're earning. If you really want to start getting ahead financially and gaining more independence from your job then you're going to want to put your money where it can grow considerably over time.
Among the easiest ways to do this is to invest your money into a broadly diversified fund that tracks a well established market index such as the S&P 500 or the MSCI World, which can grow your money by about 7% on average each year in real terms over the long run.
Don't underestimate this seemingly small number because through the power of compounding it will turn your wealth into a small fortune in the future.
The key is to stay disciplined when it comes to investing and avoid getting drawn in by temporary fads. There's always going to be new "ideas" or "hot picks" that sounds like they could make you a lot of money, but in reality they're probably going to do the opposite over the long run. Very few people, professionals included, are able to beat the market so the chances are you're not going to either.
Adopt a passive strategy where you simply invest some of your money each month into a diversified index and let the market growth do its thing naturally over time.
Here's 3 money tips:
If you need the money within 3 years, don't invest it because you don't know if the market will rise or fall in the short term.
Invest the money with the intention to keep it invested for the next 3 decades. Long time horizons have consistently returned positive results.
Set up automatic payments into your investments and only check them 3 times each year. The less you check the less likely you are to make knee-jerk reactions.
2.3 Prepare for big events in life
You're not going to be a bachelor forever.
Don't get me wrong, do whatever you want with your life and live by your own rules - after all, if you don't you're probably going to feel like you've missed out on some things - but there's probably going to come a day where you want to take on some bigger life projects.
Buy a house, get married, have kids - those sorts of things and not specifically in that order.
These things are expensive and can become the source of stress - both financial and non-financial - for many men out there, regardless of their age. So it's best to put some thought and preparation into them now even though they might still seem an age away.
Big projects in life involve a lot of energy and input from yourself and anyone else who might be involved. More often than not there's going to be additional costs besides the ones you planned for, and unexpected costs from things that simply don't go the way you had planned.
The earlier you start to prepare the less stress it will cause, and the less effort it will take.
Here's 3 money tips:
Consider a third of your investments to be towards life's bigger projects.
Put a third of your bonuses and extra earnings towards saving for these things.
Don't save for more than 3 big things at any one time - stay focused.
3. Living a life
The remainder of your income after setting up your base and planning for your future goes into this part of your budget.
This is the fun part of being a young man full of energy and earning money. Naturally you're going to want to spend some of your income and to be honest it's what you should do.
After all, you've earned it so why not?
But while you're entirely in your own right to spend your money you don't want to let yourself go too overboard lest things get out of control.
3.1 Don't overspend on your look
As a young guy there could be many benefits when it comes to working on your looks and appearance - you get noticed more, you're treated better, and it gives you that boost of self confidence.
But don't let yourself fall into the trap of thinking that buying expensive brands and designer wear is going to automatically elevate your looks to the next level. If you instead focus on your own ability to "carry the look" you'll soon realise that you can actually buy more reasonably priced, unbranded clothing and still have an impactful presence on the room.
It's the man that makes the suit, not the other way around.
Make a habit of staying in shape, learn how to find clothes that fit well, look after those clothes, and learn how to combine different clothing items to make different styles. In addition to that, learn that you don't need to overdo it on the aftershave or the hair gel to make yourself more attractive.
Here's 3 money tips:
You don't need more than 3 suits and they don't need to be tailored. Find off-the-rack suits that almost fit you and get them altered for that sharper look.
Buying some new clothes once every 3 months is plenty - learn how to utilise what you've already got to make a variety of different looks and styles.
If you're spending on a gym membership make sure to go at least 3 times a week - if you're not doing that then just cancel the membership and save your money.
3.2 Stop going wild (too often) with the lads
It cannot be denied that some of your greatest memories are going to come from the days or nights you spend with your friends - or "the lads" - getting up to some mischief, probably involving alcohol.
There's going to be nights out clubbing, lads holidays, bachelor parties, sporting events and just the odd "chill down the pub" evening that ends up getting a bit wild.
While you don't want to miss these sorts of fun occasions you don't want them to dominate your "fun life" either. Just think how much it's going to cost you in the long run if you're heading out every weekend and spending somewhere in the region of £100 on drinks and entertainment.
Things will rack up quite quickly if you're not careful and over the course of a year there'll be a hole in your wallet to the tune of a few thousand. Let yourself enjoy, of course, but you don't need to go off the rails every single time.
Instead, take a step back and think about drawing some lines and setting some spending limits. Not everything you do for a pass time needs to involve spending a lot - so perhaps you could introduce a couple of new and interesting hobbies to the group.
And if the group just doesn't seem interested then perhaps it's time to find a new group of friends that are more financially aligned with yourself.
Here's 3 money tips:
Stick to 3 drinks a night while out and about - your wallet and your belly will appreciate it.
Try just involving alcohol once in every 3 meet ups with the lads - do a few other things that don't result in waking up with a hangover and an empty wallet the next morning.
Set 3 spending limits for each outing: An assumed level of spend that you intend to stick to, an extra level if a group-spend takes you over the first level i.e. a big round of drinks, and a final level that tells you to call it a night if reached.
3.3 Keep it real when going on dates
Being a young man you might be keen on meeting someone you're attracted to, if you haven't already, and taking them out for a date. If it's someone you're already in a relationship with it's fun and intimate; if it's someone new or you're still getting to know it's intimidating and exciting.
And it can also be expensive.
If you're someone who likes to behave like a gentleman you might decide that the costs of taking someone out is going to be on you. Now we're living in 2021 so I know some people are going to find that antiquated - so let me put it like this:
If you're the one who's chasing, you should be prepared to pick up the bill - or at least offer to do so.
But there's a difference between trying to impress and simply wasting your money for no good reason. This could come in many different forms with the most obvious being the amount of money you splash out on taking your date to a nice venue.
We all like to be seen as the successful guy who's able to impress, but try to keep it real. After all, you don't want to end up in a place where you need to maintain a false image just to keep your date interested - it just isn't worth it.
Here's 3 money tips:
3 sprays of cologne is enough for each night - any extra and you're just going to overwhelm your date and need to buy a new bottle sooner.
Always have 3 different date ideas that are interesting yet low-cost, so you don't have to fall back to doing something boring and spending extra money as a low-effort way to impress.
Wait for the 3rd date before doing something expensive - before #3 you don't even know if you like them yet.
Young guys are constantly bombarded by society on what "defines their success" and this often comes with an underlying pressure to spend money to maintain such appearances. While there's nothing wrong with wanting to project an air of success and confidence, it shouldn't come at a sacrifice to a person's financial stability or progress towards financial independence.
I've obviously made some massive generalisations when it comes to the younger guy while writing this article - there is without a doubt going to be many different personalities, preferences, and behaviours out there and not everybody is going to place equal value on the same things.
Some of you might care little for dating and finding a partner, while others may have no intention of ever buying a house.
But I've based all of these money tips on my own experiences and regardless of the type of person you are or who you want to be, I believe there's something that can be gained from following at least a few of them.