Best Financial Advice When You’re in Your 20s

Best Financial Advice When You're in Your 20s

Being in your twenties is an exciting time in life. By your mid-20s, you may have gotten your degree and gotten your first real job. You’re making more money than you have at any point in your life. In addition, you have freedom because you’ve moved away from home and may not yet be married and have kids. You are also likely to be healthy. This is one of the best periods of your life. However, instead of just living life day by day, take the time to incorporate some of this financial advice when you’re in your 20s so you can pave a successful path for your future.

Find Cheaper Entertainment than Dining Out

Dining out, especially if done frequently, is an enormous money drain. I made the mistake of eating out regularly in my twenties and early thirties. Now that I’m older, I regret the money I wasted because I remember very little about those experiences.

While many twenty-somethings go to restaurants and bars as a social outlet, see if you can find a different way to spend time with friends. I had a frugal friend who hated spending money going out to eat. Every time we met, we’d do something free like hiking. Or, we’d go to the store and buy ingredients to cook at home. Those experiences I remember.

Travel More

The best time to travel is in your twenties and early thirties because you have a flexible schedule and your body adapts quickly to different time zones. In my twenties, I traveled to China, Ireland, Switzerland, and Japan. I found those trips worth every penny I spent, and I have wonderful memories.

I wish I would have traveled even more and spent the money I used to dine out on travel instead.

Invest in a Retirement Fund

The earlier you start saving in your retirement fund, the better. Even if you don’t have a lot of money, starting younger will yield you more money in retirement than beginning in your 40s with more money to invest.

Take Advantage of a Company Match First

If you work for a company that matches the amount you contribute to your retirement fund, invest as much as you can up to the match maximum.

When I started my first career job after getting a Master’s degree, my employer required me to contribute 8% of my gross salary, and the company matched that amount. I resented having that much pulled out of my salary every paycheck because money was tight. However, I saved 16% of my salary thanks to the company match. I worked at that company for 10 years, and that money still makes the bulk of my retirement savings today.

Invest in a Roth IRA

Roth IRAs have income limits. You’re unlikely to hit those limits when you’re young, so after the company match, if you still have money to invest, put it in a Roth IRA. Take advantage of this investment vehicle when you’re young because when you’re older, you may make too much money to do so.

Don’t Accrue Debt

You may have student loan debt, but beyond that, do your best not to accrue any more debt. Work on paying off the student loan debt as quickly as possible. I paid off my student loan debt in less than 10 years. (I probably could have done it faster if I hadn’t been eating out so frequently.) However, my husband got a graduate degree when our family was young, and we had to take out student loans for that. We are still paying those loans off today.

When you’re single, eliminating debt is easier than when you’re married with young kids and all of the expenses they bring. If you are debt-free when you start having kids, your financial life will likely be smoother.

Limit Your Social Media Usage

Best Financial Advice When You're in Your 20s

Social media is a huge time suck. Honestly, how much time do you spend on social media? If you’re like the typical American, the answer is way too much time. I’m not saying avoid all social media, but try putting a limit on yourself such as 30 to 60 minutes a day.

Get Your Time Back

Think of all the things you could do with the time you spend on social media. You could read a book, get a side hustle, hang out with friends, the list is endless. Social media is an empty activity. You don’t make memories using social media.

Save Your Money

The other facet of social media is that you can be influenced to spend money on items you didn’t even know you wanted. The less time you spend on social media, the less money you’ll spend on items influencers are pushing.

Exercise Regularly & Eat Healthily

When you’re in your twenties, your body is in its prime. You can drink too much, eat too much junk food, and stay awake too long, and your body bounces back. However, your body won’t be able to always do that.

Instead of abusing your body in this way, as many in their twenties do, why not exercise regularly and eat healthy foods? You’ll reap the dividends from this behavior when you’re in your 40s and 50s and beyond.

I didn’t take care of my health in my 20s and 30s. I rarely exercised, and I was overweight (probably in no small part thanks to all of the eating out I did). Now about 10 years ago, I started exercising and eating right. I felt (and still do feel) so good, that I wished I had started with these healthy habits when I was younger.

Take care of your health when you’re young, and you’ll also save yourself a lot of money on medical bills when you’re older.

Final Thoughts

Enjoy this stage of life, but also utilize this financial advice when you’re in your 20s to secure your future. That includes spending money on memories such as travel rather than dining out regularly. Also, invest in yourself, both monetarily and physically.

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