8 Smart Money Moves To Make In Your 20’s

Being smart with money in your 20’s will help you to be financially established when you reach your 30’s. Taking these critical steps can help you to be financially stable and free in the future. In this post, I shared with you 8 smart money moves to make in your 20’s.

Young people are freaked out about finances and planning for the future. Honestly, they have a pretty good reason to be nervous because a lot of people have no clue what they’re doing. Worst of all, this type of thing isn’t properly taught with formal education so many young people are left on their own.

You may not think of your 20’s as a time to get serious about finances. After all, your 20’s are spent figuring out your career and finding a place to settle at. But believe it or not, your twenties are actually the perfect time to establish smart money-related practices.

Here are 8 smart money moves to make in your 20’s:

1. Spend Less Than You Make

Making a habit of living on less than you make will help you reach your financial goals much quicker and easier. If you get used to this early, it will get you in the habit of saving more and spending less, allowing you to save for big purchases — such as a house or car — and put more money towards your retirement.

Spending less than you make will also help you avoid credit card debt. Using credit cards to build your credit can help prepare you for when it’s time to make one of those big purchases, but you have to make sure you’re doing it the right way.

2. Save Up Your Money

A young adult starting out with a job that does more than just cover their living expenses is in the ideal position to develop a solid savings habit. The sooner you start saving, the longer you can take advantage of compound interest.

Money saved in your 20’s and 30’s add up to more by the time you retire than saving the same amount in your 40’s and 50’s. Start by saving a small amount from each pay check for long-term financial goals and increase how much you save as your income increases over time.

3. Create A Budget

Budgeting is one of the easiest ways to keep track of your spending and it can also ensure that you’re not going overboard in any particular category. If you really want to get your finances on the right track, map out a budget and review it every few months to make sure it’s something you can actually stick to. If not, you may need to look at cutting some expenses to avoid debt or cripple your savings efforts.

Nowadays, there are tons of tools that can help you budget even easier. Tools like Mint are specifically created to show people where they spend their money on a monthly basis. You can use that information to create budgets for yourself and make smarter financial decisions.

4. Learn How To Set Goals

Goals are critical to financial success and learning how to set smart goals in life is one of the smartest money moves you can make in your 20s. Craft a comprehensive financial goal, which can act as a guide on how your finances will be for the foreseeable future.

5. Pay Off Your Debts

Education debts, including student loans, credit cards and personal loans can become harder to pay off as time goes by. While you may plan to make larger payments once your income increases, the longer you’re out of school, the more important other opportunities and commitments tend to become.

The money that’s needed to be paid back can possibly hold you back from goals and pursuits, so deal with your debts in your twenties and start your thirties ready to invest in your future. Be extremely conservative when you’re in debt and make it your primary goal to get even.

6. Save For A Home

Though not everyone aims to own a home, if that’s a goal of yours, it’s critical to start saving as early as possible. However, real estate has a lot of long term value and it’s something that everyone should consider at some point.

Most houses are built around 30 year old loans. If you can manage to buy a house in your 20’s, that’s ideal but you want to try to save up and at least buy a house in your early 30’s. By doing this and engaging with a 30 year old loan, you’re setting yourself up to pay off your house completely by the time you also retire.

7. Understand Your Health Insurance

It’s extremely important to understand at least some basics about your health insurance options in order to make sure you’re choosing the best plan that fits your needs. Not only that, but you need to make sure your money is also being spent wisely.

Your health is the most important thing in life. Not only should you have health insurance, but you should have a plan that supports you. In the event of a medical emergency, you don’t want to be in over your head with expenses so always think of the best case and worst case scenarios when choosing your health insurance plan.

8. Decide On Graduate School

Going back to school can be a worthwhile move for many people, but it’s one that does come with a cost. The sooner you come to a decision about graduate school, the better equipped you’ll be to make other financial choices.

If you decide to go back to graduate school, your entire savings plans may change. However, if you’re satisfied with where you’re at….you can focus on things such as buying a home right away. When it comes to graduate school, you should always weigh the opportunity cost before making a decision.

Conclusion

Being smart with money in your 20’s will help you to be financially established when you reach your 30’s. Taking these critical steps can help you to be financially stable and free in the future. In this post, I shared with you 8 smart money moves to make in your 20’s.