4 Money Moves Every Woman Should Make in Her 20s

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GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the reasons behind these inequities and provide solutions to change them. We believe financial equality begins with financial literacy, so we’re providing tools and tips for women, by women to take control of their money and help them live a richer life.

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In today’s column, we’re chatting with Dani Pascarella, CFP, co-founder of the financial wellness platform OneEleven, about the money moves women in their 20s should make. At this point in life, time is on your side, so starting to build good financial habits now can pay off greatly in the long run.

Building Wealth

Boost Your Money Knowledge

“The four most important areas to thoroughly understand are money mindset, budgeting, credit and investing,” Pascarella said. “There are many ways to do this — podcasts, courses, books, coaching, etc. — but what’s important is you find the method that works best for you.”

As you start learning more about finances, begin implementing what you know.

“Knowing what to do and actually doing it are two different things,” Pascarella said.

More Help: 3 Alarming Ways Women Are Lagging Behind Men When It Comes to Their Finances
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You’ll find that the more you learn about money and start to work on building good financial habits, the more confident you will feel about money overall.

“Confidence is ‘the feeling of self-assurance arising from one’s appreciation of one’s own abilities or qualities.’ If you haven’t taken the time to develop your abilities, how can you be confident in them?” Pascarella said. “Something we hear all the time at OneEleven is, ‘I’m not good with money.’ It’s not that you’re not good with money, it’s that you haven’t spent the time to develop the skill set. When you learn to ride a bike, it takes quite a bit of practice and you’ll fall down a few times before you can confidently rely on that skill.”

Tips: 3 Money Moves Every Woman Must Make, According to Rachel Cruze

Open a Retirement Account If You Haven’t Already

In your 20s, you may believe it’s too early to think about retirement. But the fact is, the sooner you start planning for retirement, the better off you will be when that time comes.

“Women live longer than men,” Pascarella said. “The average life expectancy at birth is 79 years for women, 72 years for men. Additionally, women also earn less because of the pay gap. What does this mean? It means we have to do a lot more with a lot less.”

“The solution is compounding and understanding the time value of money,” she continued. “If you want to be a millionaire by age 65, start saving at age 25 by putting $322 away a month. If you wait to start your retirement savings until 35, you’d need to put away $736 monthly to become a millionaire at age 65. That’s more than double the contribution, just because you waited 10 years!”

Building Wealth

See: 4 Money Lies Women Tell Themselves (& Why They’re Not True)

When it comes to choosing a retirement account, don’t worry so much about 401(k) versus IRA — just go with what is available to you.

“The most important thing is that you start, and tax-advantaged accounts like a 401(k) or IRA are great places to do that,” Pascarella said. “What’s even more important is automating your contributions. Decide how much you can afford to contribute each paycheck and set up automatic, recurring transfers to ensure it actually happens.”

Read: The Biggest Money Mistakes Women Make in Relationships

Build Your Credit

Your credit will impact your ability to achieve major financial milestones, such as obtaining a car loan or a mortgage, so start building it up now.

“Monitor your credit score and understand what goes into it,” Pascarella said. “You can’t build credit if you don’t know what’s impacting it.”

One way to build credit is through responsible use of a credit card.

“Get a credit card and use it like a debit card — only buy what you can afford to pay off in full each month,” Pascarella said. “Keep your utilization rate low. If you find yourself using more than 30% of the credit available to you, this is when having a credit card is going to start hurting your score rather than helping it.”

Be sure to pay your bills on time — a late payment can affect your credit score for years.

“You can make sure this never happens by setting up your credit card to auto-pay at least the minimum each month,” Pascarella said.

Cultivating Future Female Leaders: How To Elevate Other Women in the Workplace

Master the Art of Creating a Budget

“If you don’t have a budget that works, you’re not in control of your money,” Pascarella said. “Make [budgeting] a habit in your everyday routine. Building a new habit is hard and it will probably feel like a chore at first. But once you get into a good rhythm, it’ll feel natural and easy.”

If the word “budget” makes you cringe, “change your budgeting narrative,” Pascarella said. “If budgeting feels boring and restrictive, you’re doing it wrong. It should feel empowering. You are the CEO of your own life. You worked hard, earned money and now it’s time to figure out how to spend those dollars in the way that makes you as happy as possible. Changing your budgeting narrative from a negative one to an empowering one will motivate you to stick with it.”

Read More: How the Rise of Remote Work Is Empowering Women

Finding a budget that works for you may take some time, so allow for some trial and error — and don’t beat yourself up if you don’t stick to it 100%.

“Don’t expect perfection,” Pascarella said. “Unfortunately, the majority of budgeting tools leave little room for error and old school budgeting tactics try to shame you when you fail. Ditch the perfectionist mindset, leave some wiggle room in your budget and understand that it’s OK when your spending doesn’t go exactly according to plan. Be kind to yourself!”

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Last updated: Oct. 13, 2021 

About the Author

Gabrielle joined GOBankingRates in 2017 and brings with her a decade of experience in the journalism industry. Before joining the team, she was a staff writer-reporter for People Magazine and People.com. Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and she has been featured on “Good Morning America” as a celebrity news expert. 

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