Make sure you do this in your 20s, so that your 30s are amazing!


Written By Douglas Matus

A person’s twenties can pass in a blur of action, achievement, travel and romance. Many of life’s major milestones — from graduation and serious employment, to marriage and parenthood — come in this first decade of adulthood. The speed of life, while intoxicating, can cause people to focus on the present at the expense of the future.

Practically everyone makes some number of financial blunders. Many of these occur in a person’s twenties, as lack of experience and foresight can contribute to a series of missteps. In order to get the most out of your thirties — and the decades to come — commit to these financial plans.

A Savings Strategy

It’s important to prepare for rainy days while the sun still shines, and all twentysomethings should have some sort of savings strategy. If you set aside a small percentage of your income now, you can look forward to fewer worries in your thirties.

“Save 10 percent of your income every month,” says Carla Dearing, CEO of SUM180, an online financial planning service. “If you develop the habit of saving 10 percent, no matter how much you earn, you will always have the confidence of knowing you are living within your means.”

Create a separate savings account and consider this money as an “emergency fund.” Whenever you get a bonus or overtime pay, put it there as well. If years pass and the emergency fund never gets tapped, then congratulations: you've got a down payment on a house.

Tackle Your Debt

Most people end their twenties with a sizable amount of student loan and credit card debt. If you address this debt throughout your twenties — both in regards to avoidance and repayment — you’ll enter your thirties with more personal and financial freedom.

“Those in their twenties need to include debt-repayment as part of their financial plans,” says Robert Wolfe, CFP with United Capital Financial Advisers. “Paying off debt today means you have less to save for tomorrow, and a detailed repayment strategy will make the process more manageable.”

The best way to tackle debt is to avoid it in the first place: keep student loans to a minimum, work multiple jobs if necessary, and pay your credit card balances at the end of each month. If you’ve already accumulated some debt, sit down and calculate how much you need to save each month to repay it within two to five years.

Create Your Milestones

Your twenties are a time for exploration and adventure; but that doesn’t mean you can’t plan for a comfortable future. Think long and hard about what you want out of your financial life, whether it’s to retire at a young age, own a home, or start your own business.

“The most important advice I would give a twenty-something is to write down your goals for the next five years, with timelines and costs for each,” says Judith Cane, Canada’s Money Coach. “Then you can work your budget around your goals.”

If you don’t know where to start, a few general goals will create an excellent foundation. First off, set a savings goals of one month of your living expenses. From there, build the savings to three months, and eventually commit 15 percent of your annual income to tax-advantaged investments.

The Reality of Retirement

This final number, 15 percent, is an ideal earmark for personal retirement. Many people in their twenties fail to realize the benefits of early savings for retirement. As far as investments go, it’s hard to beat the tax benefits of retirement plans.

“Starting early gives your retirement savings the longest time to grow,” says Robert Wolfe. “Your money only works for you when it is invested, and an early retirement fund is a healthy retirement fund.”

Through the power of compound interest, those who begin retirement savings in their twenties get a massive head-start. If your employer has a 401(k), max out your contribution; if they do not, you can always start an IRA.

A little foresight and planning can transform your twenties into a time of financial readiness. Rather than look back wistfully and wonder what could have been, get started on your future now — your future self with thank you. 

Written on June 6, 2016

Self Lender is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at

Ready to join Self Lender?

comments powered by Disqus