Setting realistic financial goals in your 20s and 30s

We share how you can set yourself up for financial success in the future – without depriving yourself today.

It’s easy to say that these are the decades when you should cut down on the avocado toast and get serious, but there are ways you can set yourself up for financial stability without sacrificing the things you enjoy.

In this article, we share a few strategies you can use to start laying the groundwork for your financial future.

Work out a budget

'In your 20s and 30s, you might be thinking about buying a home or other major purchases, so budgeting will be key,' says Claire Exley, Head of Wealth Services at Nutmeg (Opens in new window)

'You'll want to understand what you're spending on essentials and work out what you need in the shorter term.'

Budgeting isn’t about cutting down to the bare minimum, it’s about examining your spending and seeing how you can make it work.

'There's no one-size-fits-all,' Claire says, 'but if you can afford to, it can be helpful to use the 50/30/20 split as a rough guide – 50% for your essentials, 30% for any discretionary spending and 20% for savings.'

After working out your budget, your next step is staying on track. 'It can be as simple as a spreadsheet or a budgeting app online,' Claire says. 'The Chase current account also makes it easy to see the breakdown of what you're spending.'

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Create an emergency fund

If you have money left at the end of each month, first, congratulate yourself a little bit, then think about setting it aside for an emergency fund.

Claire says, 'At any age, it's important to have an emergency fund – easily accessible money you can use if anything were to happen. If you were unable to work, for instance, could you cover your essentials for three to six months?'

There’s no dedicated amount you should have to hand at any given time, but if you save just a little money each month, you may be surprised at how much you have when you really need it.

'This is part of why it's so important to understand your essential monthly spend,' Claire explains. 'So, you know what your monthly outgoings are, and you can be prepared if anything happens.'

Of course, you have to remember that it’s for real emergencies – not luxury shoe sales or online auctions for original 1980s new wave T-shirts.

Think about your long-term goals

As you work out your budget, you might naturally start thinking about how you’d like your life – and finances – to look in the future. 'When it comes to setting goals, we would emphasise that it should be guided by your individual personal circumstances – what's important to you and what your timeframe is,' Claire shares.

Think about what you would need to achieve that first small step and work out the practical steps you can start taking towards it.

You don’t have to map out a full five-year plan, but understanding your long-term goals, from starting a business to starting a family, can help you define – and stick to – your short-term ones.

Start saving for retirement

Retirement can seem like an eternity away, but paying into your pension now can give you a great head start.

Claire explains, 'You can't underestimate the power of early pension savings. It really accumulates over time.'

'If you're part of your employer's pension plan where they might be matching your contributions, the more you can take advantage of those opportunities the better; otherwise, you're essentially missing out on free money when it comes to matching.'

Even if you make small contributions each month, you’ll be giving your pension plenty of time to potentially grow into a substantial pot by the time you retire.

Introducing Nutmeg

Introducing Nutmeg, the digital wealth manager that's part of the Chase family. You can now open an account with Nutmeg (Opens in new window) and keep an eye on your investments from the Chase app – so you can see everything in one place.

Nutmeg and J.P. Morgan Europe Limited are J.P. Morgan companies. Products provided by Nutmeg are not guaranteed by Chase. Before applying, you should consider if a Nutmeg account and its features are suitable for you and your investment needs.

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• Could you save by changing your approach to going out?
• How to approach your pension to help with future success
• 5 humble habits to build serious wealth