13 Money Moves To Make in Your 20s That Will Set You up for Life

Your 20s are a critical time for laying the foundation of your financial future. The decisions you make now can have a lasting impact on your financial well-being, helping you build wealth, avoid debt, and achieve your long-term goals.

Let’s explore 13 smart money moves to make in your 20s that will set you up for life. From budgeting basics to investing strategies, these tips will help you navigate your financial journey with confidence.

1. Build an Emergency Fund

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Building an emergency fund is one of the first steps toward financial security. This security fund is intended to make a nest egg and provide financial assistance in the case of an emergency or extended period of unemployment. Financial experts suggest you have enough in your fund to float you for 3 to 6 months.

Transfer 10% of your monthly paycheck directly into your emergency fund. If you have direct deposit, you can link the accounts and watch the fund grow without even thinking about it.

2. Build Excellent Credit

I believe every young person should know the positive and negative effects of credit on their financial life. Buying items on credit can lead to a positive credit score, but failing to pay off the debt can result in a negative credit score. Poor scores can lead to trouble when buying a car, renting an apartment, or buying a home.

Conversely, positive credit scores make these events much more accessible. Try to avoid monthly balances and taking out high-interest loans. Keep a consistent payment plan to set yourself up for an excellent credit score.

3. Pay Down Debt

Building a good credit score does come with amassing some debt. The trick is to pay off said debt before the interest rates compound, leaving you with extra money owed. The best habit is to try and pay off what you spend each month.

If you do have a credit card balance, try to work on paying that off as soon as possible. Pay more than the minimum payment and stop adding to the debt. The less you owe, the less money you will waste on interest fees.

4. Set Financial Goals

At this point in your life, you might decide what is important to you. Do you want to own a home? Do you want to retire early? Do you want to set up your kids with a college fund? If so, set these goals in stone and start working towards them.

Once you set these goals, you can start working towards them. You can start stacking up your savings for a down payment on a property or set up a savings account to save for college. Even if you are fresh out of college, it is never too soon to look towards the future.

5. Take Advantage of Employee Benefits

If you are anything like me, a young 20-something, you most likely “forgot” to take advantage of employee benefits. Most companies provide some sort of 401k plan, with some matching a portion of contributions.

Seriously? That is like free money. Set up a direct deposit to a 401k and watch that account grow over time. Once again, it is never too early to start saving for the future!

6. Build Financial Literacy

Improving your knowledge of the way money works is only going to benefit you in the long run. Keep up to date on investment strategies, financial properties, and economic principles. This information can help you see trend in the marketplace.

How do you stay educated? Numerous apps and podcasts can help you along your journey. Instead of listening to music on your morning commute, switch to a financial podcast and learn a lesson in money management.

7. Get Health Insurance

Failure to take control of your body can lead to financial ruin. Having a strong health insurance policy can help you avoid costly surgeries, medicine, and extensive care as you age.

It doesn’t matter how young and healthy you feel. A medical emergency can strike at any minute. The last thing you want is to be stuck with medical bills that will set you back years from the financial growth you have obtained.

Trust me, it is better to have it and not need it than to need it and not have it.

8. Ditch the Status Car

Once you graduate and obtain a decent job, you might want to treat yourself to a fancy car. I strongly recommend that you fight that urge. Odds are you are found with very little credit to your name. This means you are going to get an extremely high interest rate and end up spending thousands of extra dollars on this car.

You are not in high school anymore, and no one will judge you on how “cool” your car is. Invest in something practical with minimum payments to keep your savings and investment portfolios growing.

9. Avoid Constantly Going Out

Having a social life in your 20s is important. But making it a habit of going out several nights a week can be bad for your health and your wallet.

One of the things I recommend is hosting game nights. Once a week, alternate friend’s houses to participate in organized games. You can provide food and have your guests be in charge of beverages. It is a great way to avoid going out and save money on expensive drinks. Plus, you don’t have to deal with traffic and Uber fees.

10. Stop Frivolous Spending

Once you step out on your own, you will have to decide what purchases are within your budget and what are not. For instance, do you really need to buy a new smartphone every year? Or is it really smart to buy new clothes every month?

It might be better to put your money to better use. As long as the items you own are working properly, there is no need to spend the money on them. Use excess cash to build your emergency fund, pay off debt, or add to a retirement fund.

11. Associate With Like-Minded Individuals

The company you keep will help you achieve your financial goals much quicker. Having friends to bounce ideas off of and share tips with is crucial to your success. They can also help you stay accountable and on track with your budget and savings plan.

This also becomes important when you start dating. Having a partner with the same financial goals will provide a sense of camaraderie and avoid money arguments that may come up in the future.

12. Learn How to Cook

First, everyone should learn how to cook. It is a basic life skill and will save you a fortune over ordering takeout every night. That being said, most young people are incapable of cooking their own meals, which results in fast food.

This is a giant money waste and an unhealthy habit. There are plenty of YouTube tutorials and cooking shows that can help you learn basic meals. Stop throwing your money away on takeout and teach yourself some basic kitchen skills. Trust me, you will love all the money you are saving.

13. Live Within Your Means

To sum everything up, the main lesson you should learn is to live within your means. If you can’t afford rent, find a roommate. If you can’t afford your car payment, get a cheaper car. If you keep on going over your budget, adjust your expenses so it works.

I know its tempting to splurge on treats for yourself, but trust me, you have plenty of time for that. Focus on building a foundation and a savings so you can afford all things you want once you hit your 30s!