10 Most Important Money Lessons To Learn in Your 20s, According to Experts


Your 20s are a great opportunity to enjoy life, explore your tastes and interests and try new experiences. It can also be the perfect time to lay the foundation for your financial success.

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Establishing certain habits now can allow you to reap the rewards for decades to come. So where should you start? Financial experts shared with GOBankingRates the top 10 most important money lessons to learn in your 20s.

1. Start Saving a Percentage of Your Income Now

Instead of a specific dollar amount, try saving a percentage of your income every month, says Drew Feutz, financial planner and co-founder of Migration Wealth Management.

“If you focus on saving a percentage of your income, then your savings rate will remain in a good spot as your income increases,” he said.

This habit makes it easier to save for big expenses like a car, a down payment for a house or an engagement ring.

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2. Live Below Your Means

To save a percentage of your income, you’ll have to live below your means. This is perhaps the most important financial habit to implement while young, according to Feutz.

“Doing so will help you set yourself up for a successful financial future and will provide flexibility in life — not only now but later as well,” he said.

3. Automate Your Retirement Savings

Retirement may seem like a lifetime away. But the sooner you start saving, the more comfortable you’ll be in the long run.

“Automating your retirement savings makes it easy,” said Feutz. “Automate what you want to save so that you’re never tempted to spend it.”

4. Make a Monthly Budget

Levon Galstyan, a certified public accountant at Oak View Law Group, encourages young people to maintain a monthly budget — or a weekly one if possible.

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“Make a budget for the next 30 days during the last week of every month,” he said. “All of your bill due dates should be noted, and money should be set away for savings.”

5. Investing Is a Long-Term Game

Following the latest hot investing trend may sound like an easy way to get rich. But time in the market always beats trying to time the market, says Feutz. After all, if active fund managers — who have teams and the latest research at their disposal — can’t beat the average growth benchmarks over an extended period of time, chances are, you can’t either.

Instead, Feutz recommends focusing on the power of compound interest by faithfully investing a percentage of your income each month.

“This is an extremely powerful concept that can change your life for the better — or worse, depending on how you use it,” he said.

6. Always Keep an Emergency Fund

Over 25% of American adults would be unable to pay their monthly bills if they faced a $400 financial setback, according to 2020 data from the Federal Reserve. To avoid that situation, Feutz says you should build an emergency fund.

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“Building the habit of having a cash account in place that you don’t touch unless it’s a true emergency goes a long way in making sure that the wealth-building process isn’t interrupted,” he said.

7. Pay Off Your Credit Cards Every Month

Credit cards often offer great rewards, but not paying them off in time can lead to compounding debt. Around 14 million Americans have over $10,000 of credit card debt, according to a recent GOBankingRates survey.

“Before adding anything to your cart using this magic card, you must determine whether you genuinely need what you’re purchasing,” said Galstyan.

8. Maintain Proper Insurance

Feutz urges young people to speak to a professional to determine what types of insurance they should have.

“Insurance is one of those things that you don’t like paying for but that you’re happy you have in place when a need arises,” he said.

One of the most important types of insurance may be health insurance. And yet the CDC’s 2022 National Health Statistics Report reveals that 31.6 million Americans had no health insurance coverage in 2020.

“Investing in your health is one of the most crucial financial lessons to learn while you’re still young,” said Galstyan. “Create an emergency fund in high-yield savings accounts to assist you in paying any unforeseen medical expenses, and consider acquiring a health insurance policy.”

9. Stay Out of Bad Debt

As expenses rise faster than income, it’s hard for young people to steer clear of debt entirely. But Galstyan encourages them to keep their debts as low as possible.

“It might take two or three decades to entirely pay off debt, including larger debts like student loans or mortgages,” he said. “You must make sure not to accrue any further debts. Work as hard as possible to pay off the ones you already have.”

10. Check Your Credit Report Regularly

How often should you review your credit? Galstyan recommends every three months.

“It’s a habit you need to develop soon,” he said. “The credit report is like a mirror, reflecting your debts, collection accounts, wrong information — everything. The sooner you understand your financial life, the easier it will be to take corrective measures properly.”

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About the Author

Jenny Rose Spaudo is content strategist and copywriter specializing in personal and business finance, investing, real estate, and PropTech. Her clients include Edward Jones, Flyhomes, PropStream, and Real Estate Accounting Co. As a journalist, her work has appeared in Business Insider, GOBankingRatesMovieguide®, and various smaller publications. She’s also ghostwritten a book and hundreds of articles for CEOs and thought leaders. Before going freelance, Jenny Rose was the online news director for Charisma Media, where she oversaw three online magazines, hosted a daily news podcast, and managed the editorial content for the company’s robust podcast network. In 2014, she graduated summa cum laude from Stetson University with bachelor’s degrees in Communication & Media Studies and Spanish. During her college career, she won two awards for her research and was named “Top Senior” in both her majors. Find her at jennyrosespaudo.com and connect with her on LinkedIn.
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