How to Manage Money in Your 20s


How to Manage Money in Your 20s

Most financial sages will tell 20-somethings to set a monthly budget, allow a little each month for entertainment, and be sure to save 10-30% of take-home pay.

That’s a good start, but if you really want to excel at managing your finances, then you’re going to have to do better than that.  For anyone just starting out, who hasn’t hit the big three-oh yet, even just a few tweaks here and there with your financial habits will result in a tremendous impact later on in life. Read on to find out how.

Manage Your Money Now, Reap the Rewards Forever

If you ask anyone who’s even just a tiny bit educated in the principles of personal finance, they’ll tell you that time is a major factor in almost everything you do. That is, the things you do in your 20’s often permanently set the course for the rest of your financial life. Attitudes develop, habits are formed, and long-range strategies can be set in place.

The trick is developing a few ground rules for yourself, training your brain to stick to them, and setting into motion a series of actions that will, in the long run, pay out nicely. Here are two major principles to adopt in your 20’s, followed by a crucial plan of action to follow now, while you’re still young.

Principle 1: Debt is Always Your #1 Enemy

Just now, we hinted that saving 10% to 30% of your income is the bare minimum. Plus, we hinted that allowing yourself an “entertainment” budget should be optional. If you really want to be hard-core about managing your finances so you can reach you goals, strike it right out.

Well all of that goes double if you’re in debt. In fact, if you have debt, don’t allow yourself an entertainment budget at all. Debt in your 20s is perhaps the single-most dangerous state to find yourself in, after getting arrested, falling chronically ill, or developing a substance abuse problem. Please, do yourself a favor and consider debt to be as alarmingly dangerous as those dreadful situations.

Plus, the faster you get rid of debt, the healthier all the other parts of your financial life will be. Remember the last time you had the flu? You probably stopped working out. Chances are you didn’t eat very healthily, either, as you didn’t have the strength or the will to cook good food. That meant your body just started to feel worse and worse.

Same with debt: fix it fast or it will consume your life. Your savings will compound because more of your paycheck will be available. You’ll have more cash to work with because you won’t be throwing money down the drain of interest payments. As you reach your 30’s, 40’s and beyond, following this principle will pay off exponentially.

Principle #2: Material Possessions are Temporary

Another guiding principle to follow is that buying stuff won’t make you happy. It’s been shown over and over again through research,¹ yet people still fall prey to over-consumption, ending up with homes that are jammed with stuff they don’t really need.

If you can teach yourself to buy only what you need, plus the occasional splurge (nobody said you have to become monastic about it), you’ll save yourself thousands of dollars each year. Over a lifetime? It’s mind-boggling how it all adds up.

Instead invest in yourself. Education pays off dividends in the long run. Take a course at night school to gain an extra skill you can use in your career. Learn a great trading system so your savings can grow year on year.

Take Action: Start Saving for Retirement Now

One of the hardest thing to tell a 20-something person is that they should start saving for retirement. You just started earning, and retirement is a literal lifetime away, right? But what most young people forget is this:

It only takes a little bit socked away each month to make a HUGE difference later on!

Time is on your side, so use it. Even if you just put away $100 per month, your future self will thank you for it. And to conclude, you future self will thank you for following ALL the advice you’ve discovered here today. It’s sort of obvious how much you’ll benefit – now it’s time to put your mind to it and start managing your money the smart way.


  1. White, Martha. Here’s Proof Buying More Stuff Actually Makes you Miserable.Time Magazine. Retrieved 2/3/2017 from