7 Money Must-Dos for 20-Somethings

Your 20s are a time when you start to figure out who you are and who you want to be. Your independence is growing, the money is flowing, and you’re ready to tackle life head-on. 

What a time to be alive, am I right? 

Your 20s are also a time to get your s*** together financially. It’s the prime decade to lay a sturdy foundation for the years to come. Your responsibilities are few and your expenses will only grow as you get older. The quicker you figure your money situation out, the better. 

Let’s get right to the meat of it. Here are 7 steps to financial security in your 20s. 

1. Prioritize and Prepare

First things first—you need to get clear on your financial goals and where you currently stand. Some things to consider and write down:

  • Any debt you have: Student loans, car loans, credit cards, etc. and how much.
  • What’s in your bank account(s): Savings, checking, and any investments.
  • When you want to be debt-free: Pick a date—you’ll be more likely to make it happen if you can visualize a light at the end of the tunnel. 
  • WHY you want to be financially secure: Writing down a “why” will help you keep focused. Maybe it’s, “To finally pay back my parents,” or “To take that trip I’ve always dreamed of.” Whatever your “why” is, write it down and look at it daily.

Knowing these numbers will help you realistically plan for the future. You should also have the following:

  • An emergency fund with 6 to 12 months-worth of expenses.
  • A retirement plan: Could be a 401k, Roth IRA, or whatever works for you—but you needto have one. Trust me, retirement might feel light years away, but the sooner you prepare, the sooner you’ll be kicking it on a beach. 
  • Insurance: Disability (a must in my opinion, but I’m no expert), health, car, etc. 

2. Write Everything Down

Now that you’re aware of your current situation, it’s time to start tracking. And I mean track everything. Including: 

  • Income: Include where it came from.
  • Expenses: Include EVERYTHING. Dates, amount, where, what. 
  • Balances: Keep track of monthly balances so you can watch your accounts grow in real-time.

Tracking is important because it keeps you accountable and forces you to come face-to-face with your spending habits. Once you’ve tracked for a bit, you’ll notice trends. For instance, you might realize you’ve been spending $100/month on coffee when you thought it was closer to $30. These are really useful epiphanies because they allow you to set realistic budget numbers. 

The easiest ways I’ve found to track are Excel and the Notes app in my phone. There are tons of fancy budgeting apps out there, but I’m a fan of simplicity. If you’d prefer something more robust, go for it.

3. Automate Everything

Everything is easier when you don’t have to think about it. Luckily, we live in a world where technology can basically do everything for us. If you’ve ever paid a late fee for a bill you somehow forgot about, you know how handy automation is. Personally, I automate the following:

  • Bills: Rent, utilities, phone, car, etc. 
  • Savings: I automatically transfer a certain amount monthly into my savings accounts. 
  • Investing: I have a few different investment accounts that I automatically transfer money to each month. 

When you automate your savings and bills, you never miss the money, because you never saw it sitting in your account. This makes saving way less painful. Not to mention you’ll never face a late fee again—double whammy.

4. Set (and stick to) A Monthly Budget

This is where most of us fail—setting and sticking to a budget. Budgets aren’t exactly the most exciting topic, but they’re incredibly important if you want to feel the freedom of financial security. 

There are a few different types of budgets, but my personal favorite is the “Zero Budget.” Basically, you write your monthly income at the top of a page followed by all of your expenses until you reach the number 0. If you budgeted $30/month for coffee, but didn’t spend it all, you can either roll it into the next month’s coffee budget OR put it toward loan payments and savings. 

It’ll take a couple of months to shake out a realistic set of numbers but once you do, the most important part is sticking to them. Think of your budget as a non-negotiable pact. Spending more than you have budgeted simply isn’t an option.  

5. Make More 

If you’d like to spend more money, you need to make more of it. Might seem silly, but I’m continually baffled by the people who live above their means and act like there’s no other way. There’s always another way. Tired of only spending $20/month on eating out? Get out there and make more money. 

You can…

  • Get a part-time job
  • Sell your things 
  • Babysit 
  • Walk dogs
  • Uber 
  • Invest
  • Stop making excuses

6. Pick Your Luxury 

We can’t all live in mansions, drive luxury cars, get our hair and nails done weekly, and travel the world 24/7. But most of us can pick 1 luxury that’s important to our health and happiness and be willing to spend big money on it. 

For me, travel is that luxury. I feel the most “me” when I’m on a plane headed somewhere new. Because of that, I’m willing to spend tons of money on travel. But with tons of money being put toward my world explorations, I have to give up other little luxuries. 

I don’t: Get my nails done, get my hair done, eat out often, grab drinks every weekend, drive the newest car, live in a luxury home, or wear the nicest clothes. 

Do I wish I could have it all? Of course. But it’s not currently realistic for me. So for now, I’ll stick to travel. What’s your luxury going to be? 

7. Be Strategic About Credit Cards 

Some financial experts will encourage you to stay away from credit cards completely. And for those of you who struggle to pay them off or are self-aware enough to know they’re a dangerous idea, ignore this section. 

If you’re someone who can handle the responsibility of a credit card—keep reading. 

Not all credit cards are created equal. Especially for young people. Do some research and figure out what makes the most sense for you. You might consider:

  • Interest rates
  • Benefits: Cash back, travel benefits, etc. 
  • Annual fees 
  • Usability: Is it internationally accepted? 
  • Other fees

I stick to travel cards that are usable in most countries and don’t have foreign transaction fees. Why? Because I like to travel, duh. 

Assess your current situation (and chosen luxury), and choose a card based on that. But make sure you automate payments and stick to your budget! Just because it’s a credit card, doesn’t mean it doesn’t count. 

Please, don’t just pay the minimum. Pay the entire amount at once. If you can’t do that—it probably means you’ve spent too much. 

Other Tips and Tricks

  • Use cash: Researchers have found people spend more carefully when handing over cold hard cash than when they simply swipe. 
  • Get professional help: Financial advisors exist for a reason—use them. 
  • Strategically pay off debt: This is where a financial advisor can come in handy. 
  • Create multiple revenue streams: More than 1 income is always a good thing. 
  • If you have a specific spending habit (coffee, for instance) create a separate bank account where you put your monthly budgeted amount and get a debit card for that account. This way, when you’ve reached your budgeted amount, you can’t spend more. 
  • Give back: Karma is real. Whether it’s $1 or $100, donating money to a cause that matters to you is a great way to ensure some positive financial karma is coming your way. 
  • Be realistic: True, lasting wealth takes time. Don’t expect to be a millionaire with zero debt over night. 

If you follow these 7 steps, your 20s and beyond are going to be much less stressful. Not to mention you’ll have a lot more cash in your wallet. 

Oh, and one last thing—if you’re going out every weekend, spending money like crazy, and not amplifying your income—please do not complain about your situation. We all have choices. And when it comes to money, sometimes the smart choice is the one that feels hard in the moment—but pays off in the end. 

Positive Vibes,

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