How to Get Ahead Financially in Your 20s

For many young Kiwis, student loans are the first significant financial burden they take on. The average student loan balance in New Zealand sits at around $24,000. While these loans are interest-free while you’re in the country, they still require repayment. If you plan on moving overseas, interest will start accruing after a 12-month grace period—something to keep in mind if you’re dreaming of working abroad. Understanding these financial commitments early is key to how to get ahead financially in your 20s and avoiding unnecessary debt traps.

Beyond student debt, personal loans, credit cards, and buy-now-pay-later services are common financial traps. Statistics show that 1 in 6 young adults are at risk of over-indebtedness, often due to these easily accessible credit options. These types of debt can feel like a solution at the time but often lead to financial stress later on.

Key takeaway: Avoid unnecessary debt where possible and be mindful of repayment obligations, especially if you plan on working overseas.

A simple budgeting rule to follow is the 50/30/20 method, which allocates your income as follows:

• 50% to needs: Rent, mortgage, utilities, insurance, and essentials.
• 30% to wants: Entertainment, dining out, travel, and discretionary spending.
• 20% to savings and investments: This includes emergency savings, KiwiSaver contributions, and any additional investing.

While this is a great starting point, we found that many financial advisers actually spend far less than 30% on wants, which can make a big difference in wealth-building over time.

Key takeaway: Have a budgeting system in place to ensure you’re not overspending on wants and neglecting savings.

Lifestyle creep happens when increased earnings lead to increased spending rather than savings. It’s easy to justify upgrading your car, taking more expensive holidays, or eating out more as your income rises, but failing to save and invest can leave you stuck in a cycle of living paycheque to paycheque.

A common example is car loans—many young professionals take on high-interest debt to drive a car they can’t actually afford. One of us shared a story in the podcast about buying a Mini Cooper on a car loan at 21. While it felt great at the time, the $600-a-month repayments were a massive burden. Buying a car outright or opting for a more affordable vehicle can free up significant cash flow for savings and investments.

Key takeaway: Keep lifestyle inflation in check and prioritise saving and investing as your income grows.

If you already have debt, here are two popular repayment methods:

• Avalanche Method: Pay off the highest-interest debt first while making minimum payments on others. This saves the most money in interest over time.
• Snowball Method: Pay off the smallest debt first to build momentum. While this isn’t the most cost-effective, it can be psychologically rewarding.

For student loans, repayments in New Zealand are deducted automatically from your paycheque, so they often require less attention. However, if you plan to go overseas for an extended period, make sure you have a plan for repayment since interest will begin accumulating after a year.

Key takeaway: Tackle high-interest debt first and avoid unnecessary credit where possible.

Housing is one of the biggest expenses young people face. If it’s a viable option, living at home for a few extra years can provide a massive financial advantage. The median rent in New Zealand is around $600 per week for a two-bedroom home. Staying at home for two years could result in potential savings of $20,000 or more, even if you contribute towards household costs.

Some parents even “charge” board but secretly save it and gift it back when their child moves out—a strategy one of us shared from a personal story in the podcast.

Key takeaway: If your living situation allows, staying at home longer can provide a strong financial head start.

The earlier you start investing, the better. Even small contributions to KiwiSaver or other investment funds can grow significantly over time. Start with whatever amount you can afford, even if it’s just $10 a week, and increase contributions as your income grows.

Similarly, building an emergency fund is essential. Aim for at least $1,000 to start and work towards saving 3-6 months’ worth of expenses. As we discussed in the podcast, even having $1,000 in savings can prevent financial stress and reliance on high-interest debt.

Key takeaway: Investing early and having an emergency fund provides financial security and long-term growth.

One of the best ways to increase financial security is negotiating your salary. In the podcast, we discussed how New Zealanders, and especially women, tend to undervalue themselves when negotiating pay.

To negotiate effectively:

1. Research market salaries for similar roles.
2. Document your achievements and contributions to the company.
3. Schedule a meeting with your employer and confidently present your case.

One of our key takeaways from the episode was: If you don’t ask, you don’t get. Your employer isn’t likely to offer more money unless you advocate for yourself.

Key takeaway: Learn to negotiate early, as every salary increase compounds over time.

Getting ahead financially in your 20s isn’t about having everything figured out—it’s about building good habits and avoiding common mistakes.

Avoid unnecessary debt. Buy-now-pay-later schemes and car loans can keep you stuck in financial quicksand.
Follow a budgeting rule. The 50/30/20 rule is a simple way to manage money effectively.
Be mindful of lifestyle creep. Don’t let increasing income lead to excessive spending.
Start investing early. Even small amounts will compound over time.
Negotiate your salary. It’s one of the best ways to boost long-term wealth.

By following these steps, you’ll set yourself up for financial security and flexibility in your 30s and beyond. Start today—your future self will thank you!

If you’re in your 20s and looking to get your finances on track—whether it’s budgeting, investing, or planning for your first home—get in touch with the Lighthouse Financial Wealth team to start building your financial future today!

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