Your 20s can be an energizing time in your life as you navigate friends, love life, and career paths. Most people, even in their mid-to-late 20s are still struggling to establish themselves. That can be hard to do if your job isn’t paying you enough, you’re struggling to make rent, have no savings, and are being crushed by debt.
If this sounds like you, there are ways you can reverse a downward financial spiral and meet your long-term goals. Here are some essentials to follow so that you can navigate yourself out of your 20s and into your 30s with your finances under control.
Set realistic goals for the present.Maybe you’re looking for a new job that will pay better. Whether that job comes sooner or later, setting strict but realistic goals for your present lifestyle can help get you back into the green. This means you might have to try living below your means for a short while, which can be tough, but well worth it in the long run.
Create a budget. The first thing you should do is look at all your monthly expenses. Carefully tracking your purchases and expenses can be arduous, but if you notice you're spending too much every week on fancy green tea smoothies, it might be time to start making them at home. Budgeting allows you to self-correct your spending habits, so you can pay for your next auto loan or utility bill. There are also different ways to budget. For example, the 80/20 is designed so that you put 20% of your income toward savings and the rest toward your monthly expenses—ideally, 50% toward necessities and 30% toward recreation or personal use. Explore various budget methods, so you can find the one that works for you. There are also free budgeting apps that are convenient and easy to use.
Make a savings account.Everyone knows it’s important to save money, but that doesn’t mean everyone does it. While it can be a struggle, it’s the best way to ensure a financially secure future. Whether it’s a job loss or a medical emergency, hard times can hit at any moment. But having a nest egg to fall back on can help keep you from stumbling too hard. That’s why creating a savings account that serves as an emergency fund is important. It’s meant to be a fluid account, so even if you dip into it occasionally, that’s okay because you’ll build it back up.
Keep your credit score up.Experts advise checking your credit score annually. But the best way to keep your credit score in pristine condition is by paying back loans and your bills on time. Going beyond the 30-day grace period means your credit score will take a hit and you’ll be less likely to get that loan or apartment you want. Of course, if you don’t have credit, now is the time to start building. While opening a credit card can be a great way to do that, you’ll want to pay it off each month. Otherwise, you could be creating more debt for yourself.
Get credit counseling.If you’re overwhelmed by debt, making an appointment with a credit counselor can be a great first step to getting that under control. A credit counselor will work with you on your budget, and if you qualify, may advise a debt management plan. This is where a credit counselor works with your lenders to lower your interest rates and consolidate your loans into one affordable monthly payment, so you can pay it off in three to five years.
Whether you get credit counseling or manage your own budget successfully, embracing financial literacy and taking control of your budget will ultimately help you decide your next step on your life path—without the gloom of debt hanging over you.
FAQs
Most people, even in their mid-to-late 20s are still struggling to establish themselves. That can be hard to do if your job isn't paying you enough, you're struggling to make rent, have no savings, and are being crushed by debt.
Is it normal to have no savings in your 20s? ›
We are all just winging it. It's absolutely normal — but it is also a perfect time to start making money. Many people in their twenties have few responsibilities, and no families to take care of. That makes you more able to move different places and try different careers.
How to become financially stable in your 20's? ›
Financial moves to make in your 20s
- Develop good budgeting habits. ...
- Pay down debt. ...
- Automate your savings. ...
- Build good credit. ...
- Start saving for retirement. ...
- Make sure you and your loved ones are covered financially. ...
- Work toward owning your home.
Millennials and Gen Z represent a wide range of ages and credit profiles, but both include consumers in their 20s. Having more than $10,000 of debt might sound like a lot for someone at the beginning stages of their career, but it's not all bad as long as you're strategic with your pay-off plan.
At what age are most people financially stable? ›
That said, the typical age of financial independence should be between 20-23 years old, according to a Bankrate survey.
Where should a 25 year old be financially? ›
20k is the ideal savings amount for a 25 year old
“Ideally, your savings should reach $20,000 by the time you turn 25,” says Bill Ryze, a certified Chartered Financial Consultant (ChFC) and board advisor at Fiona. The national average for Americans between 25 and 30 years of age is $20,540.
Is saving $1500 a month good? ›
Saving $1,500 per month may be a good amount if it's feasible. In general, save as much as you can to reach your goals, whether that's $50 or $1,500. You could speak with a certified financial planner to help develop a plan for your finances if you aren't sure how much money to save regularly.
Is saving $1000 a month good? ›
Saving $1,000 per month can be a good sign, as it means you're setting aside money for emergencies and long-term goals. However, if you're ignoring high-interest debt to meet your savings goals, you might want to switch gears and focus on paying off debt first.
How much do most 25 year olds have in savings? ›
Savings by Age
| Age | Average Account Balance | Median Account Balance |
|---|
| Under 35 | $11,250 | $3,240 |
| 35 to 44 | $27,910 | $4,710 |
| 45 to 54 | $48,200 | $6,400 |
| 55 to 64 | $57,670 | $5,620 |
2 more rowsSep 19, 2023
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
- Your 20s are about establishing a foundation as you gain financial independence.
- Set a budget that balances your needs, wants and wishes.
- Create a plan to pay off debt and stick to it.
- Begin building your credit.
- Start an emergency fund of up to three months of living expenses.
Strike a balance—working toward financial security doesn't mean you need to deprive yourself.
- Track Your Spending. ...
- Live Within Your Means. ...
- Don't Borrow to Finance a Lifestyle. ...
- Set Short-Term Goals. ...
- Become Financially Literate. ...
- Save What You Can for Retirement. ...
- Don't Leave Money on the Table. ...
- Take Calculated Risks.
Worrying about saving has always been hard for 20-somethings who begin their careers at the bottom of their earning potential. But saving is especially difficult right now because on top of student debt, housing and food costs remain high even as inflation has started to cool.
Is $10,000 a lot of debt? ›
What's considered too much debt is relative and varies by person based on the financial situation. There's no specific definition of “a lot of debt” — $10,000 might be a high amount of debt to one person, for example, but a very manageable debt for someone else.
Is it normal to struggle in your 20s? ›
In your twenties, you will face a range of challenges, from choosing a career path to navigating relationships and managing finances. It's a time when you will learn a lot about yourself and the world around you. While it can be a time of uncertainty, it's also a time of opportunity.
Are you supposed to struggle in your 20s? ›
In your twenties, you will face a range of challenges, from choosing a career path to navigating relationships and managing finances. It's a time when you will learn a lot about yourself and the world around you. While it can be a time of uncertainty, it's also a time of opportunity.
How much money should I be making in my 20s? ›
Average Salary for Ages 20-24
The median salary of 20- to 24-year-olds is $720 per week, which translates to $38,012 per year. Many Americans start out their careers in their 20s and don't earn as much as they will once they reach their 30s.
What percentage of 20 year olds are financially independent? ›
Among the key findings: 45% of young adults say they are completely financially independent from their parents. Among those in their early 30s, that share rises to 67%, compared with 44% of those ages 25 to 29 and 16% of those ages 18 to 24.
Is 20 a good age to start saving? ›
If you contribute $1 at age 20, it could grow to $5.84 by the time you're age 65. If you contribute $1 at age 25, it could grow to $4.80 by the time you're age 65. If you contribute $1 at age 30, it could grow to $3.95 by the time you're age 65.
