Adulting: mapping out your financial road to retirement from your 20s

Your 20s and early 30s

Checkpoint 1: Set goals and create a budget

Planning for your financial future starts with setting short, medium and long term goals. And yep, that includes thinking about retirement.

When do you want to retire? How much money will you need when you get there? What kind of lifestyle do you want when you retire?

It might seem like you’re getting ahead of yourself, but think about it this way: you can’t kick a goal if you don’t know where the goalposts are.

Once you have your goals figured out, create a budget that documents all of your spending each month.

ASIC has a handy budget planner that can get you started. We can also help you put a more comprehensive one together.

Checkpoint 2: Build healthy spending habits

Now that you’ve got a budget, it’s important to respect it.

Don’t spend more than you’ve budgeted for in each category, such as food, entertainment or (gulp) alcohol.

Every time you do, you’re shooting your future self in the foot.

Remember though, this isn’t about cutting out all the fun – it’s about finding a balance between enjoying yourself now, and really enjoying yourself later. So make sure your budget includes treats for the here and now.



When it comes to debt, try to never keep a negative balance on your credit card. These cards carry insanely high-interest rates, and you’ll be accomplishing nothing more than giving your hard-earned money to the credit card company.

Checkpoint 3: Start investing now, not later

By investing even a little bit of money now, you give compound interest a longer time to work its magic.



The best way to illustrate this is by looking at an example featuring two brothers we’ll call Lewis and Clark.

Lewis decides to start saving early, and invests $2,000 a year for 10 years, then does nothing at all for the next 20.

Clark, on the other hand, procrastinates for 10 years, then invests $2,000 each year for the next 20 years. Both brothers earn a clean 7% interest each year.

Who do you think ends up with more money after their 30 years are up?

Well, Clark did pretty well. He put a total of $40,000 of his own money in and ended up with $81,991 at the end of it all.

Lewis on the other hand, only put $20,000 of his own money in, but after the same timeframe he ended up with $106,930 – over $20,000 more than his brother Clark!

That’s the power of compound interest.

The moral of the story is: start investing now, even if you can only afford a little bit, and you’ll thank yourself later.

Checkpoint 4: Learn the basics of investing

It’s ok to start investing by putting your money into a savings account, but before long you’re going to want to move your money into an investment vehicle that works harder for you.



Take some time to research the different types of investments that exist in the market, and give some thought to which ones might be best for your needs.

Do you want to start a property portfolio? Perhaps a few steady performers on the ASX 100 have caught your eye? Or maybe you like the look of ETFs?

Whatever you choose, make sure you do your research beforehand. And then start putting your savings towards it!

If you need a starting point on where to conduct your research, get in touch and we’ll point you in the right direction.

Checkpoint 5: Choose your own superannuation fund

When it comes to your superannuation, it pays to never settle for the default option. You want to choose an option that best reflects you and your risk profile.

As such, here are some quick tips to help you choose a super fund.

– Identify your risk level: Are you a ‘slow and steady wins the race’ kind of person? Or are you willing to accept a little more risk for the potential of higher returns?

– Create a shortlist: Narrow the field to make the task less overwhelming. Super comparison websites can help you refine your list, but you should never make your decision on a website rating alone.

– Look at the long-term performance: Try and pick out a fund that has performed consistently well over 5-10 years, not a fund that had a bumper year in 2018.

– Compare fees and costs: ASIC has written this report to help you avoid the sting of hidden fees and costs.

– Any additional benefits or services? Before you decide to make the move to a particular super fund it’s worth calling the fund directly to see what other services or benefits they offer.

Final word

Saving for retirement can seem daunting, especially in your 20s and 30s, but it doesn’t have to be.

Start by taking baby steps: set a goal and budget, spend wisely, and save whatever you can afford each month. Before long you’ll start to see progress.

And of course, educate yourself! Be sure to check out our next article on this series on adulting, which shifts the focus to your mid-30s and 40s.

If you have any questions in the meantime, don’t hesitate to get in touch. We’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.