Your 20s are a formative time, not just for discovering who you are but for building habits that can lead to financial success down the road. With fewer responsibilities, many people find that their 20s are the perfect time to experiment, take risks, and lay a foundation for long-term financial growth. Whether you’re fresh out of college or starting your first job, here’s a guide to help you make the most of your money.
- Start by Paying Off Any Existing Debt
One of the most empowering financial decisions you can make is to tackle any lingering debt from the past, whether it’s a credit card balance or student loan. Not only will paying down debt improve your credit score, but it will also make you feel more financially capable. Making that commitment can reshape your view of money and help you feel in control of your finances.
- Invest in Quality Essentials
Rather than opting for the cheapest option, invest in items that will last—especially for everyday essentials. For instance, a high-quality winter coat, reliable shoes, or a sturdy bag can serve you well for years, saving you money in the long run. By investing in quality, you’ll avoid constantly replacing worn-out items, and you’ll ultimately end up with pieces that both look and feel better.
- Consider Freelance Work and Create an LLC
Many 20-somethings are now picking up freelance work, and starting a personal LLC can provide tax benefits and boost professionalism. An LLC can help you streamline your taxes, take advantage of self-employed deductions, and protect your personal finances. With the right tools and help from an accountant, your LLC can set the foundation for a sustainable side hustle or even a future business.
- Embrace Learning and Skill Development
Investing in your education is invaluable. Whether it’s through a certification, attending a workshop, or simply picking up a new skill on the side, growing your skill set can increase your earning potential. Use resources like online courses or community classes to gain expertise that will pay off for years to come.
- Save and Plan for Big Adventures
Your 20s are often a time to explore the world, so if you dream of travel or relocating, start setting aside money for these experiences. Moving abroad, taking a career-related trip, or even going back to school can be life-changing, and by saving up, you create financial stability for such opportunities.
- Build a Financial Safety Net
As you work, make it a priority to build an emergency fund. Financial experts generally recommend saving at least three to six months’ worth of expenses. Having this cushion not only protects you in case of unexpected expenses but gives you the freedom to pursue opportunities without constantly worrying about money.
- Adopt Smart Financial Tools
Take advantage of budgeting apps and personal finance software. These tools can help you keep track of your spending and saving habits and make it easier to achieve your goals. If you’re new to budgeting, these apps can help you start managing your income effectively.
- Develop Good Habits with Long-Term Value
Consider setting aside a portion of your income each month for investing. You don’t need to be an expert—apps that offer fractional shares or automated investing can help you get started. By investing early, you allow your money to grow over time, benefiting from compounding interest.
- Invest in Health and Wellness
Taking care of your health is one of the best investments you can make. Regular exercise, good nutrition, and proper rest will not only improve your quality of life but also help you avoid costly health expenses in the future. Consider purchasing a gym membership, investing in cooking equipment, or even getting a pet to help improve your mental and physical health.
- Learn to Cook and Meal Prep
Meal prepping and cooking at home is a habit that can save you money and benefit your health. If you’re new to cooking, consider signing up for a meal kit service to build confidence in the kitchen. A Dutch oven, for instance, is a one-time purchase that can be used to prepare a wide variety of dishes and help you save on takeout.
Final Thoughts
Making smart financial decisions in your 20s doesn’t mean avoiding fun or adventure—it’s about planning and making thoughtful choices that pay off over time. Start small, stay consistent, and use this decade to set yourself up for a secure and rewarding future.
FAQs – How to Make Money in Your 20s
1. What’s the best way to make money in your 20s?
The best ways include starting a side hustle, freelancing, investing early, and learning high-income skills. Combining income growth with disciplined saving and spending is key.
2. Is it possible to build wealth in your 20s?
Yes! With smart budgeting, avoiding debt, starting investments early (even with small amounts), and living below your means, you can lay a strong foundation for long-term wealth.
3. What are some smart investments for people in their 20s?
Beginner-friendly investments include index funds, ETFs, robo-advisors, high-yield savings accounts, and fractional shares in the stock market. These offer low risk and compound growth potential.
4. How much should I save in my 20s?
A good rule of thumb is to save at least 20% of your income if possible. Prioritize building an emergency fund, then start investing for long-term goals like buying property or early retirement.
5. Are side hustles worth it in your 20s?
Absolutely. Side hustles not only boost your income but also help you explore passions, gain new skills, and create financial safety nets beyond your 9–5 job.
6. How can I control spending in my 20s without feeling deprived?
Use the 50/30/20 rule to balance needs, wants, and savings. Create a budget, track your spending, and allow guilt-free splurges within limits to maintain financial discipline.
7. What financial mistakes should I avoid in my 20s?
Avoid high-interest debt, impulse purchases, delaying investing, and not budgeting. Start building good credit, manage student loans wisely, and focus on growing your income.
