Are you a twenty-something struggling to manage money? You’re not alone. In fact, it’s one of the most common issues young adults face just entering the workforce. Maybe you feel you don’t have enough money to start managing, or don’t know where to start.
Money management isn’t something that comes naturally for many of us, so don’t feel bad if you’re still trying to figure things out.
The good news is that it doesn’t matter how much or how little money you have—you can still get started with smart money management habits.
I will be giving you the basics on how to get started with managing your cash flow, setting financial goals, and building financial security. We know it can be overwhelming at first so let’s dive in and break it down into manageable steps!
- How should you manage your money in your 20s
- How much should you be saving in your 20s
- what can I do with extra money in your 20s
- where should you put your money in your 20s
How should you manage your money in your 20s
If managing money in your 20s feels overwhelming, you’re not alone. Money matters can be confusing to tackle on your own, but there are some key steps you can take to get started.
First, and perhaps most importantly, start budgeting! Make a realistic budget for your income and expenses, so that you know how much money you have to work with each month. You’ll need to account for things like rent or mortgage payments, bills, food, shopping, and entertainment.
Don’t forget to save too—set up an emergency fund dedicated purely to saving as well as any future financial goals that you may have.
Based on my first-hand experience, no amount is too little to save. If you wait until you have a lump sum you may never save any money trust me.
Keep track of where and how much money you spend each month—whether it’s in cash or credit—so that you understand where it is going.
If after creating a budget and tracking your spending you find yourself short at the end of the month, consider reducing your spending by finding ways to save on entertainment costs, such as getting discounts through loyalty programs or cutting out unnecessary expenses.
These steps form the foundation of good financial management in your 20s – start here and don’t forget that every bit counts!
How much should you be saving in your 20s
When it comes to saving, you may not be able to save as much in your 20s as you would when you’re older and have a higher income. But that doesn’t mean you don’t need to save at all.
One way to start is to make sure you’re saving 10% of your income every month. This 10% will help ensure that when the inevitable emergencies arise (which they will) you’ll have something to help cushion the blow and cover the costs. If 10% seems too high, try to aim for at least 2-3%.
You should also create an emergency fund with a goal of saving at least three months’ worth of your expenses. This will help ensure that any unexpected medical bills, car repairs, or job losses won’t take too much of a toll on your wallet.
Finally, once you’ve built up enough savings that you’re comfortable, consider investing in retirement plans like 401(k)s or IRAs – these can offer better returns compared with traditional savings accounts, allowing your money to grow faster over time.
what can I do with extra money in your 20s
You may find yourself with extra money at the end of the month, and the temptation can be to spend it all. But if you’re savvy about your future, you know that saving money, investing, and getting ahead in life should always come first.
Start small and stay consistent
When you’re beginning to manage money in your 20s, it’s important to start small, but stay consistent. Even if it’s only a small amount each month – like $20 or even $10 – putting that towards savings each month means that eventually, you’ll have built up a substantial amount over time.
Separate your short-term and long-term financial goals
When thinking about what to do with your extra money each month, make sure that you separate your short-term goals from your long-term ones.
For example, putting aside a few hundred dollars each month for an upcoming vacation – that’s a short-term goal – while setting aside a little bit of money each month towards retirement – that’s a long-term goal.
Here are some ideas of what you can do with any extra money in your 20s:
- Invest: Looking into shares and bonds is one way to invest and grow your savings over time.
- Save: Aim to save 10% or more of every paycheck into an emergency fund for any unexpected expenses down the road.
- Pay down debt: Putting extra money towards any student loans or credit card bills will help pay them off faster and get you closer to eliminating debt altogether!
where should you put your money in your 20s
When it comes to saving money in your 20s, the right place to put your money will depend on your financial goals and risk tolerance. Here are some options you may want to consider:
Bank and savings accounts
A savings account is the most basic way to save. Look for one that offers a competitive interest rate, as this will help you grow your savings faster.
Make sure you also check fees—you could be charged for things like ATM withdrawals, monthly service charges, or minimum balance requirements. You should also consider having an emergency fund that’s separate from other accounts.
Retirement might seem a long way off when you’re in your 20s, but setting up a retirement account now can help you get ahead financially down the road.
A Roth IRA or 401(k) both have potential tax advantages and give you access to potentially higher-return investments than a bank or savings account. Investing for the long term can help ensure that you have enough saved up when it comes time to retire.
High-yield investment options
If you want to get more aggressive with your investing strategy in your 20s, high-yield investments such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs) may be an option.
These vehicles carry more risk than bank accounts or retirement accounts but offer greater upside potential if chosen wisely.
Investing even small amounts each month can add up over the years and provide a nice boost to your retirement fund when the time comes.
No matter what option you decide is best for you, make sure you set aside some money each month so that it grows over time—it’ll be worth it when
So, if you’re a young adult who’s still trying to get the hang of managing your money, these tips should help you get started.
In your twenties, it’s important to create a budget that works for you, start building good credit and pay off any existing debt, and start preparing for retirement.
Developing smart money habits now will help you take control of your finances for years to come. It’s never too early to start planning for your future, so take advantage of the time you have now and begin to secure a healthy financial footing.
Let me know below what tips you can going to start implementing in your financial journey.