The 12 Best Financial Moves You Can Make in Your 20s

When it comes to personal finance, long-term planning is a must. There’s no such thing as an effective, reliable get-rich-quick scheme, and you can’t bank on winning the lottery. Instead, your future earnings and future net worth will depend almost entirely on the accumulation of your daily habits and the fruits of your long-term investments.

Getting started with personal finance in your 20s can give you a massive leg-up in this area. The more time you have to generate compound interest (and the more time you have to learn from your mistakes), the better position you’ll be in when you’re deep in your chosen career – and the sooner you’ll be able to retire.

So what are the best financial moves you can make in your 20s, to set yourself up for a brighter financial future?

The Best Financial Moves You Can Make in Your 20s

If you’re still in your 20s, these are some of the best moves you can make:

1. Invest in your education. The most important investment you can make is in your own education. Going to college or a trade school and equipping yourself with career knowledge and experience can multiply your lifetime earnings many times over.
2. Buy a house. There are some situations where renting is better than buying, but for the most part, paying off a mortgage is much better than paying rent. Over time, you’ll build equity and benefit from rising property values. Plus, when you move out, you may be able to hire a property management company and rent the property – allowing it to generate even more cash for you over time.
3. Get a credit card (or two). Open a credit card or even a couple of credit cards. Credit cards are a great way to build credit over time – and give you an option for paying bills in an emergency. Over time, you can work on raising your credit limits.
4. Avoid taking on too much credit card debt. That said, it’s important not to use those credit cards recklessly. If you accrue too much credit card debt in your 20s, it could set you up for a lifetime of debt payments. Try to pay off your debt in full at the end of each month, and leave your cards only for true emergencies.
5. Buy good insurance policies. When you’re young and in good health, it’s tempting to skip insurance. But without insurance, all it takes is a single devastating financial event to burden you with debt for a lifetime.
6. Create a budget. Budgets are extraordinary financial tools that help you make the most of your income and avoid overspending. Create a budget for all your regular expenses and stick to it as closely as possible.
7. Set long-term goals. Where do you want to be in 10 years? In 20 years? When do you want to retire? The sooner you start thinking about your long-term future, the better.
8. Build an emergency fund. Emergency funds exist to help you cover unplanned expenses – without needing to tap into a credit card. Try to accumulate at least a few thousand dollars to serve as a financial cushion for yourself. You never know when you’ll need it.
9. Live below your means. One of the most common pieces of financial advice is common for a reason: live below your means. This simple phrase means living as if you made less than you actually do; it’s a convenient and easy-to-understand path to help you avoid overspending (and save more money over time).
10. Create a career trajectory. Think about how you want your career to develop and how you can make more money over time. Where do you want to end up at the end of your career and what are the best ways to get there? Start taking action today to make that vision a reality.
11. Establish a good credit score. A good credit score is essential for taking out bigger loans, funding big purchases, and a host of other financial moves. Pay your bills on time, every time, and reduce your debts to attain a higher credit score (and keep it high).
12. Start investing. When you can, take some of your extra money and start investing in assets like stocks, bonds, real estate, mutual funds, and ETFs. You’ll thank yourself later.

To Your 30s and Beyond

As you can see, many of the financial moves listed here are beneficial no matter what age you are; they just happen to be more effective in your 20s because they’re given more time to develop and provide value. 

As you age into your 30s and beyond, keep a tight leash on your spending and make future-focused financial decisions that continue to support your long-term potential.