17 Smart Money Moves to Make in Your 20s for Long-Term Financial Security

Being a twentysomething is an exciting time. You’re exploring new opportunities, starting your career, and perhaps moving out on your own. But it can also be a bit overwhelming, especially when managing money.

To help you build good financial habits, we’ve got 17 smart money moves that will pay off big time down the road.

1. Start an Emergency Fund

When life throws you a curveball (and trust us it will), having an emergency fund is like having a financial superhero by your side. It’s all about setting a little bit of money regularly. This fund should ideally cover at least three to six months’ worth of living expenses, just in case you face unexpected expenses or a sudden loss of income.

2. Pay Off High-Interest Debt

Debt can be the ultimate party crasher, raining on your financial parade with high interest rates and pesky monthly payments. High-interest debt, like credit card balances or payday loans, can quickly spiral out of control if left unchecked,

Paying off high-interest debt in your 20s frees up money that would otherwise be wasted on interest charges.

3. Contribute to Retirement Accounts

A time will come when you’ll trade late-night study sessions for leisurely mornings and office cubicles for sandy beaches. That’s retirement, and you need to start early to build a substantial nest egg. Retirement accounts like IRAs or 401(k) offer tax advantages and compound interest, meaning your money grows over time, even while you sleep.

4. Invest in Financial Education

Educating yourself about your finances in your 20s gives you a secret weapon for navigating money management. It means taking the time to learn about topics like budgeting, saving, investing, and managing debt.

Whether reading books, taking online courses, or attending workshops, plenty of resources are available to help you sharpen your financial know-how.

5. Live Below Your Means

Of course, living below your means might not sound as thrilling as splurging on the latest gadgets, but it’s a powerful move for securing your financial future. Be mindful of your expenses and prioritize needs over wants.

Instead of keeping up with the Joneses, focus on building wealth and financial stability for yourself.

6. Automate Your Savings

Your salary may feel like it disappears faster than free pizza at a dorm party, but automating your savings allows you to slip in a little extra cash without even realizing it. You can set up automatic transfers from your checking account to your savings or investment accounts every time you get paid.

Plus, automating your savings takes the guesswork out of budgeting and removes the temptation of spending money that should be earmarked for savings.

7. Build Credit Responsibly

Building your credit responsibly in your 20s is like laying a solid foundation for your financial house. To start building credit responsibly, consider applying for a credit card with a low credit limit. Then, use it for small purchases that you can easily pay off each month. By making on-time payments and keeping your credit utilization low, you’ll demonstrate to lenders that you’re a reliable borrower.

8. Maximize Employer Benefits

Whether punching the clock from 9 to 5 or hustling as a freelancer, maximizing employer benefits allows you to unlock various perks for your financial journey. Employers offer multiple benefits like retirement plans or pensions, health insurance, life insurance, and flexible spending accounts.

Other benefits like commuter benefits, tuition reimbursement, or employee discounts can add value to your compensation package. Ensure you explore all the available benefits and take advantage of those that make sense for your financial situation.

9. Establish Financial Goals

Do you dream of traveling the world, buying a home, or retiring early? Establishing financial goals in your 20s gives you direction and purpose in your money management journey. Start by thinking about what you want to achieve in the short term, like building an emergency fund or paying off student loans. Then, consider your long-term goals, like buying a house, starting a family, or retiring comfortably.

Make a plan to achieve each of these and set a timeline for yourself. Remember, financial goals aren’t set in stone; they can evolve as your priorities and circumstances change.

10. Avoid Impulse Purchases

Buying whatever catches your eye might feel like living your best life, but avoiding impulse purchases in your 20s gives your bank a much-needed break. Before making a purchase, give yourself a cooling-off period to think it over. This could be a few hours, a day, or even a week, depending on the cost of the item.

You may be surprised by how many impulse days you can avoid by giving yourself a little time to consider the purchase.

11. Diversify Investments

Having all your financial eggs in one basket is not the best approach. Spread your investments across different asset classes, such as stocks, bonds, real estate, and commodities. Each asset class behaves differently in response to market conditions, so diversifying your investments helps protect your portfolio from volatility and downturns in any one sector.

12. Network and Build Relationships

You never know where your next opportunity might come from, and networking and building relationships in your 20s allows you to plant a fruitful career garden. Get involved in professional organizations, industry events, and networking groups related to your field. Attend conferences, seminars, and workshops where you can meet like-minded individuals and learn from experts in your industry.

13. Track Your Net Worth

Tracking your net worth is like taking a snapshot of your financial health and seeing the big picture to set yourself up for long-term success. Add up all your assets like cash, investments, retirement accounts, and the value of any property you own. Subtract your liabilities like student loans, credit card debt, and other outstanding balances.

Tracking your net worth regularly gives you a clear picture of your financial progress over time. Are your assets growing faster than your liabilities? Are you making wise financial decisions, or are you spending more than you earn?

14. Consider Side Hustles

What’s better than one source of income? Two, three, or even more! Identify your skills, passions, and interests. Look for something you love doing that could turn into a money-making opportunity. This can be freelancing, tutoring, pet sitting, or even selling handmade crafts online.

Having a side hustle not only brings in extra cash but is also a creative outlet and a fun way to explore new interests.

15. Create a Will

One of the saddest realities of life is that it eventually comes to an end. When that time comes, you would want to leave behind a roadmap for your loved ones. Take inventory of your assets, including bank accounts, investments, real estate, and personal belongings. Then, assign each asset to the individual you think deserves it.

Creating a will in your 20s gives you peace of mind, knowing that your affairs are in order and your loved ones will be taken care of, no matter what the future holds.

16. Protect Your Identity

Not everyone has your best interests at heart, especially regarding your identity. Be vigilant about sharing sensitive information online. Avoid oversharing on social media, and be wary of phishing scams and fraudulent websites that may try to trick you into giving away personal information.

Invest in robust cybersecurity measures, such as strong passwords, two-factor authentication, and antivirus software, to keep hackers at bay.

17. Consult a Financial Advisor

The best financial decisions are often made with a little help from experts. Look for a financial advisor who will take the time to understand your goals, values, and priorities. The advisor should help you clarify your financial goals, develop a comprehensive financial plan, and make informed decisions about debt.