Saving Money in Your 20s – Here’s How to Do It


Bronze Wordsmith
May 17, 2018
Welcome to the real world! If you recently graduated college or started your first full-time job, it’s time to hit the ground running. One of the first things you should do is get your finances in order. And that includes managing your spending, building a sizable nest egg, and investing your money.

Wise money management isn’t something only old people should do. In fact, I think being in your 20s is the perfect time to start.

The concept of financial responsibility can seem daunting and overwhelming when you’re fresh out of college, so I’ll break things down into three categories: Possessions and Spending, Finance and Savings, and, finally, Investing in the Future. Each of these categories covers specific elements of financial responsibility. They will help you pick and plan your own journey towards financial security. Let’s get started!

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Possessions and Spending

These money management methods are really simple and should be easy for anyone to do. “Control your spending” is one of the best pieces of financial advice for the 20s. Think about it: earning money in your 20s is an awesome thing, and that comes with a lot of temptation. Here are a few things you should keep in mind:

Don’t Chase Trends

One of the financial pitfalls for people in their 20s is the urge to keep up with trends. And I’m sure everyone knows staying on-trend costs a lot of money – companies are really good at creating new, more desirable stuff to keep you spending. So be content with what you have, and don’t worry about keeping up with the Joneses.

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Buy Stuff with Lasting Value

If you do have to spend on something, make sure the item you buy has lasting value. And by that, I mean something that you’ll be able to use for a long time. A new pair of $300 sneakers may be tempting, but how much use will you get out of those before they start falling apart? So get stuff that is durable, economical, and will remain useful for a very long time.

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Put Off Getting that Credit Card

Credit cards aren’t genies that grant you whatever shopping-related wishes you have. Repeated use of credit cards for non-emergency purchases will keep you in a cycle of debt that will be hard to escape the longer you remain in it. So use cash for as long as possible. Using cash will make you more mindful of your spending.

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Spend with a Goal in Mind

Remember: spending wisely is a matter of planning as much as it is a matter of discipline. Saving in your 20s is also a matter of spending more wisely. Whenever you head out to do your shopping, have a detailed list of what to buy – I even go so far as to plan my route through the mall! That way, I avoid the temptation to shop for non-essential stuff (the gaming store is a huge money vacuum for me, which is why I try to avoid passing by it).

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You’re Never Too Young to Declutter

A lot of us will have accumulated a lot of stuff by the time we hit our 20s. If something is no longer useful (or no longer “sparks joy” – there, I said it) don’t hesitate to sell or donate it. Having stuff that you no longer love or use can weigh one down. So get rid of them, and be free!

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Finance and Savings

Saving money is an essential part of financial planning in your 20s. Once you’ve gotten your spending under control, it’s time to set that money aside for a rainy day. Here are a few ways to do that:

Have Realistic Goals

By all means, aim to save as much money as you can. But don’t set yourself up for failure. If you end up depriving yourself of essential items just so you can say you’ve saved, that could end up being counterproductive. So make an honest assessment of your monthly spending, and base your financial goals on it.

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Build Credit

In layman’s terms, this means to pay all your bills on time. And this includes all your monthly bills, not just your credit card bill (if you do have one) If you’re planning on starting your own business down the line, having good credit will make it easier for you to obtain loans from banks.

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Investing in the Future

Among the best ways to invest money in your 20s, there are a few that don’t require large initial investments – you can devote more of your finances as your earning capacity grows. Here are a few ways to invest money in your 20s:

Put Money in a High Yield Account

Once you’ve put enough money in your regular savings account, it’s time to consider putting the rest of your savings in a high yield account. This is slightly different from regular savings accounts because it earns greater interest. The interest you earn in a regular savings account isn’t much – in fact, it isn’t enough to stay ahead of inflation. So your money might actually be losing value if you keep it in a savings account! But a high-yield account earns you enough interest to stay ahead of inflation.

The catch is that you’ll have to lock-in your money for a certain period of time (these types of accounts are also called “time deposit accounts”). That’s not a bad thing since this isn’t money you should be touching anyway.

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Invest in Crowdfunded Real Estate

Many of us have dreams of becoming real estate moguls. But playing the real estate game requires a lot of money. If you don’t have access to the type of money this industry requires, there are still methods for you to invest. The way to do so is via real estate crowdfunding. The formal term for this is “Real Estate Investment Trust” (REIT)” and it works like a mutual fund. People pool their money, and an account manager invests the pooled money.

If you want to give this a go, a great site place to start is Fundrise. You only need to invest around $500, which is really low for real estate. If you’ve got more money to invest, you can try

Realty Mogul. The initial investment with them is $1,000 and offers more opportunities to earn more.

If you want something a bit more modest, you can try Rich Uncles. They’ve got a variety of investment packages, from a low $5 for student housing, up to $500 ones.

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