6 Financial Tips for People in Their 20s

Your 20s are a time of discovery, identity, and formation. You’re learning about the real world outside your campus bubble; you’re a real, human adult. You’ve graduated, landed your first job, and are making a pretty decent living. Here are a few financial things to keep in mind while you’re still young (as it won’t last for eternity):

  1. Invest in Your Future (Old, Retired) Self
    • 401k: Often times, companies will match your investment by 3-5%. Take advantage of your company’s match, and start investing in your future now. Compound interest exponentially grows in time, so if you can afford it, make sure to get Father Time on your side. Invest when you’re young.
    • If your company doesn’t offer a 401K or something similar, invest in a Roth IRA. These accounts “enable you to save money into an account you have paid taxes on already, whereby you benefit from growth free of more tax implications. Moreover, when you withdraw your money at your retirement, you pay no taxes.”
    • Check out this link on the Best IRA Providers.
  2. Save 10-30% a Month
    • And yes, your retirement savings are included. This may be difficult with student loans, new Yeezys, and Apple Watches, but those who save tend to be those who accumulate the most wealth. Why? It’s pretty simple. Save money, and you don’t spend it on useless frivolities.
    • One way to do this is to stop your binge-watching and eating, and pick up a side gig. Whether it’s tutoring or getting gigs on Fiverr, get to work while you can! If you’re talented in makeup, nails, and have a decent personality, start a YouTube channel or blog and provide tutorials. Use your time wisely, especially in your youth.
  3. Keep an Emergency Fund
    • If it costs you roughly $3,000 a month to pay for rent, groceries, insurance, and that gym membership, make sure you have an emergency fund up to 3 times that amount. That’s approximately $9,000 of emergency funds, and the more the better. Life happens, and you never know what will happen tomorrow. Embrace the motto #YOLO, and save your $$$ to live a life that’s free of financial curve-balls.
  4. Get a Point-Earning Credit Card
    • During our wedding planning, my fiance and I made over $1,000 by, in essence, planning and spending for a wedding. It was ridiculous how opening up a credit card like the Chase Freedom or Sapphire could allow us to gain bonus points for travel, restaurants, and entertainment. It was definitely one of the smartest choices I’ve made in my 20s.
    • Another thing that I have is a Target Red Card. If you love shopping at Target, get 5% off every time you shop! And if you fill prescriptions on the regular, every 5 fills you get another 5% for a day. The Red Card in conjunction with Target’s Cartwheel can save you a pretty penny.
    • But always remember to pay off the balance for each of these! Don’t get yourself into (more) debt!
  5. Have a Budget
    • This doesn’t particularly work the best for me (as I am very much a sporadic and emotional buyer), but I’m working on it. I have an amount I save with my income, and I tend to spend the rest depending on my mood, hah. My husband has a set amount he uses for the week. He even breaks it up into days, calculating how much he should be spending on his lunches. He’s basically my math hero (since I studied English).
    • There are apps like Mint which can automatize payments and keep you on task of saving for that extra purchase. If you have a Chase account, there’s a free program called Chase Blue Print that helps you plan to pay down debts and gives you a clear picture of where you’re spending your money.
  6. Take Risks
    • If you have a consistent income, take risks with investments. One practical way to do this is through buying a home. Right now, it’s a buyer’s market. That means, you get more bang for your buck. Research all that you can, but in the end, you’re ultimately not in control. So take the risk. Try the more aggressive investment, buying that new place, or opening that business while you still can manage to fall, get back up, and try again. And for all the 90s kids, hum this song to yourself: Aaliyah – Try Again.
    • One thing you need to remember is that in actuality, you are still young. You still have room to learn, grow, and thrive. You’re in the process of meeting your potential, and at times, you’ll have to step outside your comfort zone to get there. You don’t have any real responsibilities like a child or helping with your parent’s retirement… so the possibilities are literally endless.

Hopefully those tips were helpful to the wary twenty-something year old. Which ones are you already doing? What else have you found helpful during this transitional time?

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8 thoughts on “6 Financial Tips for People in Their 20s

  1. lifeasiinterpret

    these are great points – thanks for putting together. I am middle aged right now but i wished I had saved 30% of my income when I was younger… This is my biggest regret. Not that I was spending too much on anything but I lived just fine without much of a luxury. nevertheless, I think I could save more if I knew it would take me such a long time to get a decent-paying job and getting a company pension plan.
    I do too like credit cards that accumulates points but lately been eyeing cash-back ones lately… maybe I will do that sometime.
    I totally agree with your point of having a budget and investing aggressively for the future. I still do that considering that I have more than 20 years for my retirement but for young folks this certainly can pay off on the long run (as long as we can expect a similar economic situation/gains with the stock market in the future….).
    And finally, I bought a house but I guess I would rather not only because maintaining a house, especially if it is an old one, requires constant funds and gives huge headaches 🙂 but that is only my experience and I am wishing the best to you and all the young fellows out there who would like to save and invest for their future 🙂

    Like

    • tabyii

      Thank you so much for your input! Wise words and thoughts for someone who’s looking to buy a house. I’d definitely prefer a new build, one without all the quirks and kinks of a new house… But alas, the money!

      And those two credit cards can also be cash back! There are times when I’ve just cashed the points. We’re currently saving up the points for vacation because for some reason the points count for more through purchases… They WOULD do something like that to make us spend the money, haha.

      Liked by 1 person

      • lifeasiinterpret

        I am glad your points are working for you. In my case it is impossible to cash but i can use for other purposes, such as flights or hotels. the reason why I ended up with an old house was exactly the same reason; money. new houses are around $80-100 more expensive where I am. so I bought a newly renovated old house that now is giving me head aches 🙂 I hope you will get a wonderful house that you will love and the best credit card that will work wonders for you 🙂

        Like

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