SO you’ve been kicking arse at your first job and worked hard to save a whopping $10,000. Nice work! But to spend, or not to spend — that is the question.

Everyone knows that saving money is a must to plan for your financial future, but what if you want to reward yourself? Maybe a flashy new car, an overseas holiday or a shopping spree what is the best way to use your hard earned cash? Well take note 20-something Gen Ys, because the financial decisions you make now will affect you into the next decade at least.

Canstar finance editor Justine Davies says some of lifes biggest money pitfalls appear in your 20s, and bad decisions can put you behind the financial eight ball for years to come.

Im talking personal debt — credit cards and car loans mainly as well as our own ‘shell be right’ attitude that leaves us underinsured in so many ways, Ms Davies tells news.com.au.

When it comes to credit cards, the average interest rate according to Canstars database is more than 17% — thats despite our official cash rate being at historic lows.

That means that our debt can end up costing us three times the original amount by the time we eventually pay it off.

So that $6000 might seem manageable but its potentially costing you half a house deposit over time!

Protect your assets

She says if you spend your money on a car or possession, its important to take out adequate insurance and protect your assets.

I have heard cases of people buying a flashy new car on finance, crashing the said car without adequate insurance and ending up with a huge debt and no car, so please, please insure your belongings, she says.

And if you have a student loan and credit card debt and youre not sure what to pay off first, opt for the credit card.

Your HELP debt is simply indexed each year in line with the Consumer Price Index, which is running at around 2.2 per cent per annum thats a lot less than 17 per cent interest on a credit card!

Ms Davies says it is important to track your income and know what you are spending and save as much as possible.

The most important thing that will kick-start your financial life is to simply know where your money goes, she says.

You can be told repeatedly that you need to save for a house, save for retirement, insure yourself properly but until you personally understand the reason why, theyre just words.

Carefully tracking your income and spending over a number of months will help you to understand with absolute clarity why insurance and savings and goals are so very important.

Research to invest

Danny Moss, managing director at Vertical Financial Solutions, says young savers should avoid expensive credit cards and big personal loans, and consider safe stocks as potential money makers.

If you have $10,000 saved, invest in the stock market buy stocks and keep accumulating them, he says.

Keep adding to your portfolio monthly and focus on growth stocks.

If you are in debt I would pay off the most expensive debt first. Likely in this case the credit card debt would be the most expensive focus on getting rid of bad debts first.

And his key to financial freedom? Research.

Read books about investing read the financial review and begin to familiarise yourself with what investment vehicles are available to you, Moss says. Slow and steady wins the race.

Do not try to double your finances.