Saving money in your 20s can feel almost impossible, trust me I’ve been there. Rent/mortgage, bills, student loans, nights out, holidays, and that never-ending cost of living crisis, it all adds up quickly. However, the truth is that the earlier you start developing good financial habits, the easier it becomes to build a secure future.

If you’re wondering how to save money in your 20s UK, this guide is packed with realistic tips tailored for young adults living through today’s economy.

Why Saving in Your 20s Matters

Your 20s are full of milestones, your first job, first flat, maybe even saving for a house deposit. It’s tempting to live paycheck to paycheck, but starting to save now pays off massively later. Plus, having even a small cushion helps when unexpected expenses hit.

Step 1: Track Where Your Money Goes

Before saving, figure out where your money disappears.

• Use apps like Monzo, Starling Bank, or Emma to track spending.
• Categorise expenses: rent, bills, transport, food, subscriptions.
• Cancel unused subscriptions and watch for impulse spending. Trust me, this was the most surprising expense when I revisited how many unnecessary subscriptions we had. But awareness of this is the first step to saving.

Step 2: Create a Budget That Works For You

Budgeting isn’t about giving up fun, it’s about balance. A great method is the 50/30/20 rule:

• 50% → needs (rent, utilities, groceries)
• 30% → wants (socialising, hobbies, travel)
• 20% → savings + debt repayment

If your rent takes up too much, which I appreciate is common in the UK and unavoidable, adjust, but keep savings in your budget.

Step 3: Cut Unnecessary Expenses

Housing: Share a flat or move slightly outside the city. I appreciate that this is harder said than done, but saving £100 less on rent a month is £1,200 saved yearly.

Transport: Get a 16–25 Railcard or 26–30 Railcard, use travel caps, cycle or walk. Getting a railcard can save a third on rail travel. You can purchase a railcard here.

Food: Batch cook, meal prep, and reduce takeaways. The one habit which has made a huge difference to us is planning what we’re going to cook for the week. Having a list

Step 4: Open the Right Savings Account

Opening a savings account is essential, and I’d suggest you consider this as soon as you have your first job. However, it’s worth noting that not all accounts are equal. I would always advise to talk to a financial advisor or your bank directly, however the best UK options in my opinion are:

• High-interest savings accounts → great for emergency funds.
• Lifetime ISA (LISA) → perfect if saving for your first home (25% government bonus).
• Stocks & Shares ISA → higher long-term growth if you’re comfortable with risk.

Saving money per month can be tricky, depending on what you can afford but just think that the more you put in, the more you get out!

Step 5: Avoid Common Traps

• Don’t overspend on credit cards pay in full monthly. I was very reluctant to open a credit card account at first but it’s been so beneficial in building up my credit score. Just be sure to pay off you outstanding credit.
• Be cautious with Buy Now, Pay Later schemes, missed payments damage your credit score. I’ve never really used these, as they make me nervous but just act on a side of caution with these types of schemes.
• Avoid lifestyle inflation, don’t let your spending rise every time your salary does. It’s so difficult to avoid doing this but think of the additional pay as extra savings.

Step 6: Automate Your Savings

The easiest way to save money in your 20s is to make it automatic. Set up a standing order to transfer money into savings on payday. Consistency beats perfection.

Learning how to save money in your 20s UK isn’t about cutting out fun, it’s about creating freedom. By budgeting smartly, using the right tools, and avoiding common traps, you’ll set yourself up for a stronger financial future.

Start small, stay consistent, and remember: every pound saved is a step towards independence.

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