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Savings Tips for Every Life Stage: Twenties


Young people at a festival.
Credit: Julian Gentilezza

You typically have a lot of big life decisions to make in your 20s. First job. First apartment. First time managing your own finances. Many people also make decisions about attending graduate school, getting married, and even starting a family.

As you’re trying to make some of these decisions, it’s a good idea to start with the basics:

  • Create a budget
  • Control spending
  • Create a plan for managing debt, such as student loans
  • Develop good savings habits
  • Determine how much is realistic to save
  • Think about retirement

Create a Budget

The best way to start saving is to document what you spend and create a budget. It sounds like a huge exercise, but it’s the only way to visualize what you have and what you can potentially do about saving. Think about how you stay fit, or go on a plan to lose weight – regular exercise, diet and recording what you’re doing are the ways most people reach their fitness goals. It’s the same when you determine your budget; this is your click here to create a financial fitness plan.

Look at Your Expenses

Controlling spending is tough, especially when you’re starting out and have fixed expenses. For me, having cash set aside for small purchases such as coffee, lunch or one item I really “need” helps me see what I have spent vs. purchasing those items on a credit or debit card. Also look at your living expenses. Are there areas where you can cut back or spend less? Any reduction in your fixed expenses will give you more breathing room to have money to set aside for savings.

Think About Your Savings

Always think about what you can save, instead of what you can spend. The sooner you start saving, the more you will have set aside for your future. Even if what you set aside is a small amount to begin with, you’re still developing a lifetime habit. How much should you save? Click here to read This article reaches high and gives you a sense of how much to save based on your age.

Always allow yourself spending money. If you don’t do that, you’ll never save. Everyone has to have a spending budget – we all have unexpected expenses that come up. If I have a big expenditure, I make up for it by cutting my spending for the following month. By doing that, I feel better knowing I have allowed my budget some breathing room in the near future.

Address Your Student Debt

To fund my college expense, I had a combination of student grants, one scholarship and a few student loans. It felt like a huge burden after graduating to be paying off a student loan – a hidden expense I did not have when attending school. Establish a realistic payment schedule for yourself given your salary and fixed expenses. The best way to think about this payment is as a fixed expense you will pay off in the future. After three years of payments, I was able to make a lump sum payment and pay off my student loan debt by regularly setting aside extra money.

Start Saving for Retirement

If your company offers a 401K plan, you should participate. Most employers will match your contribution and encourage participation. When you sign up for a 401K plan, your contribution is automatically deducted from your payroll and deposited into the plan before it’s taxed. You may not be able to max out, but any level of participation will aid you in establishing a fund for retirement. If your company does not offer a 401K plan, explore other types of Click here to see a listing of options for IRAs. Consider having your contribution amount automatically deducted from your paycheck to the plan. This tablefrom the IRS provides an overview of contribution limits based on your salary. from the IRS provides an overview of contribution limits based on your salary.

It might not be easy to think about savings when you’re first starting out, but by creating a plan and having a savings roadmap, you’ll be in a position to have what you need, instead of having to react when the time comes to make big financial decisions.

This post is meant to be informational in nature and is not intended to be investment advice.