AJ Bell‘s Money Matters campaign aims to help all women feel good about their financial futures whatever their age and this is one of a series of articles targeted to help women at different points in their lives.

Your 20s is a time of discovery, of freedom and of huge change. It’s also a decade that comes with a slew of new demands on your finances which is why many of you may think that even the thought of investing for anything beyond the next few years is frankly unrealistic.

BIG CHANGES OVER THE LAST THREE DECADES

But the fact you are even reading this is testament to how much has changed for women over the past 30 years or so, and how attitudes to finance have evolved.

I’m thinking 30 years because I’m writing this from the perspective of a 50-something woman and remembering what my finances looked like in my 20s and wishing someone had shared a few tips that could have made a huge difference in the years ahead.

First, let’s talk about good habits because I had more than my fair share of not so good ones. I grabbed hold of every opportunity, I travelled, I lived in six different cities in the space of eight years and if I didn’t have the cash to make any of those things work, I stuck it all on a credit card, figuring that my future self would have it together enough to deal with all that debt.

Making the most of opportunities is something I will never regret but I wish I’d been more thoughtful about how I made my money work because it would have made my 30s a lot less financially fraught.

Creating a savings cushion would have been a smart way to start as would paying off debt rather than letting it build. Back then those clever bank budgeting tools didn’t exist, but using tech to help you keep track of your day-to-day spending can be an eyeopener, and paying attention to all those subscriptions can also help you pare back those you can do without.

When I got my first proper job auto-enrolment didn’t exist, so I didn’t start paying into a workplace pension until I was almost 30. That’s almost a decade of lost opportunity.

SMALL AMOUNTS EARLY ON MAKE A BIG DIFFERENCE

Even small amounts invested in your early 20s will make a huge difference to your pot because of the amount of time those funds will have in the market, so try and squirrel away as much as you can as early as you can, even boosting your contribution by 1% is a massive boon in your 20s, especially if your employer will match it.

And this is the time you can stand to be more adventurous with your investment choices, but perversely you’ll probably feel you don’t know enough to be adventurous, and many women miss out on this opportunity to supercharge their savings and investments.

Women in particular say they don’t want to risk losing money so they’d rather keep their pot in cash, even if over time the value of that cash might be eroded by inflation especially as interest rates fall.

Investing often feels like a completely alien concept so maybe try to think of it in terms of something that does compute – like a boat trip. If you’re on a short ferry hop and the sea is rough, you’re probably going to reach your destination feeling a bit queasy, but if you’re on a month-long cruise and one day in the middle of the 30 is choppy you’re probably not going to dwell on it.

MAKING THE MOST OF COMPOUNDING

You don’t need to be an expert or even particularly knowledgeable to find investments with the potential for greater growth, lots of funds come with helpful labels like growth, momentum or adventurous to help you make the most of the magic of compounding (jargon alert – compounding is when the money you invest makes money and that’s reinvested and makes more money, which is – you got it – reinvested – kind of like a superpower).

And it’s not just super long-term goals like pensions that can benefit from that superpower, though time is always a factor when it comes to saving and investing.

Lots of people in their 20s are harbouring the desire to become a homeowner one day – the memories of shared kitchens and bathrooms still has the ability to make me shudder.

Whilst there is currently a lot of noise from the government about building more affordable homes the reality is house prices are high and they keep getting higher.

Right now AJ Bell is lobbying the government to raise the threshold for the maximum property price you can buy using a Liftetime ISA, because it is a great product which does give you free government cash to put towards your first home, if you know that home will cost less than £450,000 when you finally come to put in that offer.

Unless that threshold is increased many people will find themselves priced out of using a Lifetime ISA and will face penalties is they withdraw the cash for anything other than a first home. They can leave it invested to become part of their retirement savings, but the status quo is far from ideal.

STOCKS AND SHARES ISA CAN BE A GREAT OPTION

A stocks and shares ISA is another great option for wannabe buyers, though it doesn’t come with the government contribution, if you aren’t planning to buy for five or 10 years this is a great way to protect your investment gains from the taxman.

A final thought for women in their 20s and one which I wish I’d considered, is to know your own worth.

Our research found that three in five women had never asked for a pay rise and of those that had asked only a third had been successful.

My dad always said if you don’t ask, you don’t get. Of course, it’s not quite that straightforward, but if you do your homework, and can demonstrate why you should be paid more, you might be pleasantly surprised.

The gender pay gap might have narrowed to 7% last year but it is still a big contributor to the gap between men and women’s financial well-being, so taking early steps is really important.

DISCLAIMER: AJ Bell, referenced in this article, owns Shares magazine. The author (Danni Hewson) and editor of this article (Tom Sieber) own shares in AJ Bell.

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