Smart Financial Moves to Make in Your 20s

Financial success doesn’t just happen. It takes strategic planning, real commitment and, most of all, time. And since you have time on your side when you’re in your 20s, you should take advantage of it. Financial experts recommend that by age 30, you should have the equivalent of your annual salary stashed away in retirement savings.1 Here’s how to save money in your 20s because now’s the time to get started.

7 money moves to make in your 20s

From student loans to entry-level salaries to bills, saving in your 20s may seem easier said than done. But no matter where you are in life, there are moves you can make to set yourself up for future success. The key is doing what you can with what you have. Here’s a good way to start:

1. Establish a budget and stick to it.
   Creating a budget in your 20s can help teach you the value of financial responsibility. If you need help getting started or staying on task, here are some simple tips for creating a budget for the first time. Learning how to manage money in your 20s will pay off the rest of your life.

2. Monitor your credit score.
   Your credit score can impact your life in a lot of ways. It’s important to understand and monitor your credit activity, spending and payment history so you’re staying on the right track. Be sure to receive your free credit report from all three consumer credit reporting companies (Equifax, Experian and TransUnion) every 12 months to keep an eye on your progress.

3. Get in the habit of saving.
   When it comes to saving, a little now can turn into a lot later. Pack your lunch for work. Buy in bulk. Set aside those few dollars each week and watch them add up over time. It's important to ask yourself what kind of saver you are so that you can determine the best way to save. Once you create good savings habits, they could positively influence your overall spending and help you establish a routine.

4. Get insured. Accidents happen.
   If you’re not insured, a medical injury or home emergency could cost you thousands of dollars. Here are some common types of insurance to help you get started:

   • Life, health and disability insurance
   • Auto insurance
   • Homeowners and renter’s insurance
   • Flood insurance

5. Make a debt repayment plan.
   Maybe you recently finished school and have student loans to pay. Maybe you bought your first new car and are financing the payments. Maybe you have credit card debt. Whatever the reason you may have incurred some debt at this age, make a plan to get it under control before you try and tackle other future life expenses. If you can head into your 30s with your debt under control, you’ll be ahead of the game.

6. Start an emergency fund.
   More than 35% of Americans said they couldn’t afford an emergency expense of $400.2 By saving for the unexpected, you could reduce the risk of going into debt. Here’s some advice on how to create an emergency fund.

7. Invest in your retirement.
   Getting a start on your retirement nest egg in your 20s can make things much easier for you once you near retirement age. Even if you’re not earning a big salary in your 20s, small contributions can add up. You can start with your employer’s 401(k) retirement plan or an IRA.

Use your 20s to spend, save and strategize

While each decade of your life offers opportunities to help make financial success possible, your 20s are the perfect time to lay a foundation for future financial growth. Start making smart money moves now, so you can reap the rewards in the long run.

1. CNBC. “Here’s how much money you should have saved at every age.” https://www.cnbc.com/select/savings-by-age/.
2. U.S. Federal Reserve. https://www.federalreserve.gov/publications/2021-economic-well-being-of-us-households-in-2020-dealing-with-unexpected-expenses.htm