What You Should be Saving For in Your 20s

I got married and started my own family when I was in my early 30’s. Though completely happy and contented with my life, we’re just renting our house, don’t have a savings account and live from hand to mouth basis. 
Saving For in Your 20s
Looking back, I can’t help but wish I would have done something different in my 20’s. I was financially independent and didn’t know how to spend my income wisely. If I had been smarter when it comes to managing my finances in my early years, I would have been more financially secure now. 
If you’re in your 20’s and just started earning your own money, spending too much without thinking can be really tempting. After all, you only get to live once, right?  Don’t follow my footsteps and regret later on. Start securing your future as early as now by following these wise financial tips.
Set Up an Emergency Fund
What is an emergency fund? It is stash of money set aside to cover expenses brought by unexpected circumstances such as illness, loss of job, etc. 
While you may feel that you are invincible in your 20s and nothing can seem to go wrong on your way, setting up an emergency fund is a wise decision to prepare yourself for rainy days.
Start building your emergency fund by creating a specific goal in your mind. As a general rule of thumb, you should save enough to cover 4-7 months’ worth of your expenses. Start making small goals at first, and then gradually increase your savings. 
Once you have established a goal and opened up an account specifically for this purpose, consider it like a monthly bill. This way, your mind will be programed that you have to deposit on your fund every month. You can set up an automatic money transfer for your convenience. 
Remember that the actual purpose of this fund is for emergency use only. No matter how tempting that new designer bag is, don’t touch this fund just to satisfy your unnecessary wants. 
Save Up a Down Payment for your Home
20s is the perfect time that you start saving for your home. You don’t have much financial obligation so you have plenty of resources that you can put toward your savings account. 
Though you don’t have to purchase a house at this stage, saving money for down payment is a good start. Most properties require at least 20 percent of the purchase price as a down payment. 
The first step toward your dream house is to figure out how much you can afford. Once you have a target price in mind, the next step is to make a plan on how much do you need to set aside each month. Say for example, you plan to save $50,000 for a down payment and you set it on a target for 5 years. You need to save $10,000 per year, $833 per month.
You may find it hard to squeeze in an $833 per month; however there are plenty of ways to come up with this amount. First, you can examine your budget and cut down on some expenses. You can also set up a small business or look for part-time jobs to earn extra money. 
Start Saving for your Retirement
The thought of retirement can be far-fetched when you’re young and carefree. They say you only live once, so it’s better to make the most out of it. Whilst 20s is the perfect time to enjoy life, you should always think ahead and plan for your future. Another savings that you should start making is for your retirement plan. 
Habits are hard to break so start making saving as your habit. Explore corporate retirement benefits such as 401(k) plan and IRA. If you start saving as early as now for your retirement, you’ll be able to enjoy your prime years better. 
Start Making Wise Investments
Now that you have started saving, another step toward a brighter financial future is by investing your money wisely. The stock market can be scary and overwhelming. If you’re unsure of what type of investments to make, consult with a financial adviser that can guide you in building your investment portfolio. 
Make Saving Your Priority
When you start the habit of saving as early as now, you’ll go a long way. Always be on the lookout for opportunities where you can save money. This may mean shopping at flea markets, using coupons to save on your grocery, or purchase items that are on sale. When you live a simple lifestyle, you reduce your risk of being bankrupt and set your path toward a financially secured future. If you do find yourself in some trouble, the first tip to fixing credit is to understand how credit scores work. From there, you can begin to rebuild your credit at a slow pace.
Though 20s is a milestone when it comes to your many firsts – first job, first apartment, first car, etc – it should also be a stepping stone toward a future that is brighter and more financially secured.

Denny Jones

Hey there, I'm Denny Jones, a seasoned financial writer with over a decade of experience. I'm passionate about simplifying finance and empowering readers to achieve financial freedom. My articles offer practical advice and insights to help you navigate investing, budgeting, and personal finance with confidence. Let's unlock your financial potential together!

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