Saving money in your 20s
Almost all of us start our regular income jobs at the onset of our 20s and that means you are overwhelmed with the responsibility of handling your finances and saving money for the future.
Everything around you pushes you to give in to the temptations of rewarding yourself by spending your money in all the wrong places. Thinking that you are too young to be conscious of your finances is the most common mistake that is made.
So we are here to suggest some ways to make it better. People in their 20s frequently ask how much money they should save in their 20s to have a financially stable future.
While I don’t have a number to give because that depends on how much your income is. But I do have some suggestions and ways to save money in your 20s.
You Can Also Read More:-
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Why do you need to save?
While all your general instincts point towards the fact that you are young and you can save later in life, you should do exactly the opposite of this.
Your 20s is the time where you have a chance to build healthy financial habits. These habits will keep you on track for all your life and allow you to be equipped for the challenges life may throw at you.
Moreover, there are no guarantees in life. To be able to face any hardship that comes your way in life, be it a global pandemic or a personal family emergency, the money you save at the young age of 20s can help you sail through everything.
- Now that you have decided that you want to save, setting goals will make the task easier.
Save for a rainy day
- ‘If anything can go wrong, it will.’ Murphy’s Law essentially tells us that we should get ourselves ready to face the worst. The future is unknown. You don’t know what may go wrong in a split second. But if you start building your emergency funds in your 20s, you will be better off to handle any emergency. Check out my article on building an emergency fund for more information.
Save for investing
- You are never too young to start investing. Many people even start investing while they are still in college. The earlier you start investing, the better you stand to gain. The money you save in your 20s will allow you to take more risks and potentially earn higher returns than at any other stage in life.
Save for your future plans
- Many of us start working 9-to-5 jobs as soon as college ends, but some of us have other aspirations in life. You may have an idea for a start-up, or a business or open your own restaurant. But everything requires money. Start saving early to realize your dreams.
Save for retirement
- Too far-fetched? No one thinks of retirement in their 20s. Well, you should. Saving up for retirement in your 20s can let you retire early if you want to. Start small but start early. There is no rush to create a huge retirement fund already. But starting now will save you a lot of trouble later in life.
Save for family
- In the bliss of youth, we often forget that our 20s are also the most common age where people get married and start their families. Having enough money set aside for your family obligations can have a significant positive impact on your relationship as you will be ready to face unexpected hardships.
Save for your dreams and desires
- Let us not forget that you are young and you have big dreams and hopes in life. It may be a fancy car, a big house, a world tour, or a dreamy wedding. So you will want to save money in your 20s to realize your ambitions as early as possible.
- These goals together may seem overwhelming, but this is where the rule of priority comes in. You can decide which of these goals are on top of your priority list and save accordingly. While deciding priorities, I will suggest you keep in mind which goals are necessities.
Savings does not require you to live a frugal life. To save money in your 20s is one of the ways to balance your finances where you compromise today for a better future. A little deprivation from certain things can make a huge difference in making your life stress-free.
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Frequently asked questions
1. How much should you save monthly?
- It is suggested to save 20% of your monthly income. This emanates from the 50-30-20 budgeting rule where you spend 50% of your income on essentials, 30% is on your discretion and 20% goes into savings.
2. How can I save money in my 20s?
Tips for saving money in your 20s are:
- Make a budget and stick to it
- Save on rent by having roommates
- Find affordable ways of transportation
- Look for side hustles and other ways for extra income
- Develop healthy money habits
3. What are the benefits of saving money?
- Saving money comes with a number of advantages. It can help you in case of any emergency, pay off your debt, be your cushion in times of sudden job loss and give you financial freedom.
4. What should I do in my 20s financially?
Here are some important money moves you should make in your 20s
- Make a budget and stick to it
- Develop a good credit score
- Make an emergency fund
- Start saving for retirement
- Pay off your debt
5. How much money should I keep in savings?
- It is recommended to have around 6 months' worth of living expenses in savings at all times. This means that the money should be able to cover your rent, utilities, food, and other essentials.