The 6 Best Money Moves to Make in Your 20s

Posted on Posted in Financial Planning

Whether you’re just wrapping things up at college or are pushing forward with your career, you’ll need a smart money strategy to count on during some of your biggest life changes.

Your 20s are the perfect time to adopt good money habits that will help you steer clear of credit card debt, help you build a savings account and make financial decisions that give you a high return on your investment.

Behold, the six best money moves you can make in your 20s.

1. Pick Up a Savings Habit

Your income might change significantly as you transition into your first entry-level job or change jobs to further your career. Make sure your savings strategy remains stable no matter what life throws at you. Committing to saving a certain percentage of your income every month – no matter what that income may be – makes it easy to save money with minimal effort. You can even automate this so a set amount comes out of your checking account and deposits directly into your savings account every month.

2. Embrace Your Financial Responsibilities

It can be nerve-wracking to take care of money matters without family support, and making certain financial decisions might cause anxiety. Your 20s are a great time to work through your financial hang-ups and break or prevent any bad habits that will haunt you for the rest of your life. Instead of avoiding paying bills on time, neglecting bills altogether or being so frugal that you aren’t enjoying life anymore, look forward to enjoying your hard-earned dollars responsibly while building a healthy financial future.

3. Make Mindful Money Decisions

You don’t have to wait for a financial disaster to open your eyes about where your money is going and what your spending priorities are. Take some time to review your monthly budget by creating a master list of expenses and your income sources. Be as accurate as possible when projecting expenses that fluctuate, such as groceries, entertainment costs and other lifestyle expenses. The goal is to have a baseline amount that you can label as your “cost of living” so you know whether you are living within or beyond your means. Make use of online tools like You Need a Budget for pointers on creating that all-important budget or use the PocketGuard budget app to monitor all of your purchases with a few screen taps.

4. Break Up With Credit Cards

Credit card debt can be one of your biggest sources of anxiety and becoming dependent on credit cards too often or for too long can put you at risk for a serious debt load in a few short years. Break the credit card habit in your 20s so you are only making purchases with money you have at any given time. While it’s tempting to open up new lines of credit to take advantage of special offers or defer the full cost of a purchase in hopes of paying off that balance in smaller chunks, you are simply feeding a bad habit. Resist temptation and make purchasing decisions solely based on money you have right here, right now.

5. Do Your Investing Homework

Unless you’ve been playing the stock market game for several years and have a track record of success, you don’t want to throw available savings into a high-risk investment account in hopes of getting rich fast. Take some time to educate yourself on investment accounts and trading options so you can make informed decisions. Start with more conservative investments such as a 401(k) fund to get into the habit of saving for your future.

6. Identify Your List of Splurge-Worthy Purchases

Whether it’s a vacation, a new car or furniture for your new place, identify purchases that are out of your budget but worth working toward. Setting some clear savings goals can help you stay motivated to save and actually enjoy the process of working toward something you can splurge on; plus, you can truly budget for splurges with this approach. The key is to determine exactly what those items or experiences are, how badly you want them and what you are willing to do to save for them. This mindset allows you to stop daydreaming and start working for the things you want.

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