Getting a jump start on your financial life in your 20s is one of the best things you can do.

Of course, that does not come without some challenges.

But as someone who did not pay attention that much to his finances until his late 20s (ahem, me), there are quite a few items I regret not understanding sooner.

So below I put together some of the best financial advice for your 20s. If you fall into this age group, these money tips will ensure you get ahead of most of your peers during this time.

Plus, your future self will thank you.

The Challenges With Finances in Your 20s

Pending what spectrum you are currently in your 20s (early, mid, late), your financial challenges could vary. For many, what can be frustrating and holding you back on achieving better finances are some of the following:

Large student debt

Lack of financial literacy

Low paying job or career

Consumer debt

Since everyone’s financial situations in their 20s is different, your pace to bettering your knowledge will be different than others. And that is totally okay!

What is really important is that you take some of this financial advice below and start applying them in some capacity.

And although this is financial advice for 20 year olds directly, these tips can help other age brackets as well. Let’s dive in!

Delay Gratification

Now, I won’t try to generalize here, but I’d say most in their 20s see something they want and then they must buy it. It’s like a little voice in your head that keeps tempting you until you whip out your wallet or credit card.

When you are younger, many times instant gratification consumes your world.

While the idea behind instant gratification extends well beyond money, the focus here is when we have an urge to buy something.

This can get you into some money trouble in your 20s. Even if it doesn’t seem like much, it can add up and really impact your financial future later on.

Teaching your mind to delay gratification will have a big and positive influence on your finances and throughout your adult years.

Here’s how you can train yourself:

Wait 24-48 hours on potential big purchases

Actually run the numbers of what you are spending

Figure out how this improves your quality of life or if it’s just temporary happiness.

Honestly, it’s not an easy battle to stop the need to have the latest “this” or the newest “that.” But if you can make improvements on financial decisions earlier and start to master it, your net worth will begin improving.

Focus on Income, Savings, Investing, and Expenses

During your 20s, this can be a volatile time where you may have very little saved and are not making much from your job as you begin your career.

Sure, there are plenty who will make big salaries early on, but it’s not the norm. Here’s the four areas to focus on during this time:

Income – According to SmartAsset, average salaries for 20-24 year olds is $29,770 and 25-34 is $41,951. While not bad, if you want to improve your finances, you need to focus on increasing your salary. How can you improve your skills and add more value to your company (or your own business)?

Savings – With your income, you must focus on savings as well. Firstly, building an emergency fund for any unexpected life events, surprise bills, or job loss. This is one of the most important pieces of financial advice for your 20s. I was unprepared at 26 when I lost my job, although I was fortunate to have a side hustle gig to keep my bills paid.

Investing – Start investing early in your company’s 401k plan (if they have one) or open your own IRA. The earlier you put some portion of your money to work, the better your retirement savings can be. Yes, it might be hard to put money away for retirement when you are not making much, have debt, and are aware you have years to go. But even if you start investing a small portion in the stock market, it will greatly impact your results and can exponentially grow with compound interest (more on that later on). Make sure to understand your risk tolerance, so you aren’t going in more debt or have no savings just because you want to invest.

Expenses – Lastly, you have to start paying attention to your expenses. What are your monthly bills? Where are you spending the most? Where can you try to cutback to save more? I recommend using a simple spreadsheet to write these down and keep tabs on. I used to try to manage this in my mind and I was generally wrong or was overspending when I thought I wasn’t.

Tip: You might be intimidating by investing, especially if you do not have much money to start. However, you can use a robo advisor to help and invest with a few bucks. I recommend : You might be intimidating by investing, especially if you do not have much money to start. However, you can use a robo advisor to help and invest with a few bucks. I recommend Acorns or Stash to help you get started.

Start Learning Even If It Isn’t Exciting

I think if I told myself in my early 20s to start learning about finances and budgeting, I’d probably not pay attention at all. So I get it when you might be rolling your eyes about spending time learning about money.

But, in my mid to late 20s, this was critical in improving how I manage money and my mentality to finances. I may have been a bit more enthusiastic than most, but dedicate an hour or two each week to learning.

This could be reading a book, reading some money magazines, listening to financial podcasts, etc.

Make learning finance skills a priority, even if it is not too exciting for you. Your financial results will improve and that should be your motivation. Topics of finances to learn about:

Money management

Investing for beginners

Wealth Building

Shifting your mindset

Stop Caring About What Your Friends Have

Having a social life is probably a big part of your 20s early on. You know FOMO, or “fear of missing out.” While this might apply mostly to social gatherings, it’s also a trigger bad money habits.

You see your friends going out to eat or asking you to join, talking about the latest tech, buying a new car, traveling, etc.

Whatever it is your friends are doing, do not try to keep up with them! Generally, they are going in debt to keep up appearances and not worried about future financial needs, so don’t be a victim to that trap.

Social media is a big contributor as well as social pressure like, “Oh, you don’t have the new XYZ yet?”

Remember, most likely their finances are in shambles, they are going into debt for appearances, and probably have no financial strategy in mind. So stay focused and don’t feel shamed into spending money.

Financial Planning in Your 20s

Isn’t transitioning into adulthood so much fun?

All sarcasm aside, it’s not all that bad, but it means you need to start thinking like a financial planner.

Creating a financial plan in your 20s means you must start thinking about short-term and long-term goals for financial health. It will help you make decisions to help you build your savings, a retirement plan, and adopt investment strategies to help grow your portfolio.

But it will also ensure you stay on track as your life alters in the coming years.

Your financial goals will shift over the years, but getting started in your 20s helps you visualize a path to achieving results.

I wrote more in-depth about creating financial goals, but if you need help, don’t be afraid to consult a financial planner.

Understand the Value of Compound Interest Early

When you start investing money and building an investment portfolio, it may not seem like much is happening.

I know I thought a few times, “Wait, I need to save how much to actually retire!? There is no way!”

But that thinking already sets you back. Instead, understand how compound interest works and why it matters.

The earlier you start putting money away in investments and leave it, the more compound interest works for you.

Without getting in too deep with compound interest, here is an example. If every year you invested $1,000 and got an average 7% return, in 20 years you would have $43,865. By 40 years you’d have over $213,000!

If you want to really jump in, I covered compound interest much further here.

Master the Art of Paying Bills On Time

If there was one financial skill I mastered at a young age, it was consistently paying bills on time. While you should practice paying yourself first to start building wealth, you can’t neglect your bills either.

One part of adulthood that sucks, is being responsible for your own costs and necessities of life. This is where getting your expenses organized (see #2) and figuring out your bill payment schedule is key.

Late payments or completely missing bills can greatly affect your credit score for a long time. I’m talking about years. This means more challenges getting approved for loans, credit cards, apartments, mortgages, etc.

It’s much easier to wreck your credit than build it back up, so master the art of paying bills on time.

Pay Attention to Your Credit

While paying bills consistently on time will help keep negative marks off your credit report, it is only a small piece.

Although I personally am not a fan of how credit reporting works, it’s important to maintain good credit scores.

As I mentioned in the previous section, bad credit hinders many parts of your life like getting the best interest rates on loans, applying for credit cards, or getting an apartment.

But you need to build up your credit history too, otherwise years down the road you’ll find it difficult to do some of the above things.

I got a credit card through my bank at 18, which helped establish a long history with them of never being late on payments. I made some mistakes by carrying a balance early on, so try to avoid that.

The best thing you can do is sign up for one (or both) of these credit report companies below, they are free to use. This will help you track progress, get tips, and catch any potential errors.

Find A Side Hustle

No matter how comfortable or in-demand your job or skills are, you may get laid off at some point. This happens often and can be both a surprise and stressful moment.

This is something I experienced a few weeks before Christmas back in 2014 out of nowhere. However, I had a side hustle as a web and marketing consultant that I could lean back on slightly.

By having this already lined up, I asked for more hours to keep me afloat during my job search.

Yet, a side hustle can also help you pay down debt faster, save more money, put more towards investments, and might even become a pretty lucrative business for you.

Consider finding a way to make more money on the side or using your skills to get extra gigs.

Become a “Money Basics” Expert

With personal finances, you do not need to be a financial expert in everything during your 20s. However, there are a few areas where it is critical you become an expert.

I call these the “money basics,” which you may have even seen on our homepage as in-depth category.

Although some of these items may seem like no-brainers, many times we often overlook them or realize we don’t understand as much as we thought.

What does money basic topics include?

Mastering these areas will help you make better choices for your money as you grow your knowledge. And even if you think you have a strong understanding in these areas, there is no shame in going back and reviewing.

My Favorite Financial Advice for Your 20s

I lastly want to leave you with this. The top financial advice for your 20s (and my favorite) is to start investing in yourself.

You may have already done that by going to college or a trade school. But, take this a step further and dedicate your time and energy into learning, making some mistakes, and taking on some minor risks.

By investing in yourself, it will pay you huge dividends for the rest of your life. While I had a bit of a later start to my finances in my late 20s, it has been impactful to where I am financially today.

My only regret is not starting sooner, but at the same time I’ve learned so many lessons that have helped me as I’ve transitioned now into my early 30s.

Where Can I Get Free Financial Advice?

Looking for additional ways to get financial advice? Here are a few places to consider:

Free resources and content from financial companies

Consult with your brokerage or robo-advisor support

Read financial blogs and listen to podcasts

Have a conversation with a financial advisor

Read various books about money and search online

How are you managing your money like a pro? What do you wish you started doing in your 20s financially? What advice would you give other 20 year olds? Let me know in the comments below!



