How to Save Money in Your 20s

Posted on March 7, 2016 in AdviceSaving Money

Why Saving Money in Your 20s is Easier Than You Think

Maybe you’ve read that viral post about how to save money in your 20s is premature and stressful. “When did our 20s start to feel like our 40s?” the author laments, arguing that older generations advise building a safety net because they were already married with mortgages at a young age.

It’s a provocative stance, but there’s a kernel of truth to it. If you spend your entire young life stressing about budgets and bank statements, you’ll never actually get to enjoy your youth. That said, ignoring your emergency savings fund can have disastrous results if you lose your job, suffer an illness, crash your car or have to call an exterminator at three o’clock in the morning. Clearly, having a safety net is a good idea whether you’re 22 or 52.

So how do you reconcile what you need (a financial safety net) with what you want (to travel, eat out and take taxis instead of public transportation)? The truth is, your 20s are a great time to find that balance between self-discipline and indulgence—precisely because you don’t have a lot of financial obligations just yet.  

Before you throw caution to the wind and kick the saving money can down the road a few years, ask yourself the following questions. If you answer “yes” to even one of them, it’s a good time to start saving—and can set you up for success the rest of your life.

  1. Are you making money?

If you have a job and are bringing in a monthly paycheck, you’re ready to start saving. But what if you’re barely making enough to cover your rent, food and student loans? Start by figuring out what’s most important to you, then cut back in the other places. It’s okay to have an indulgence or two, but if you treat yourself at every turn, you’ll never make progress on your savings goals.

If you think about it, there are probably a few places you can “find” money for savings. Does your apartment have an extra bedroom? Consider finding a roommate or renting the room through Airbnb. Do you overspend on clothes? Try out the capsule wardrobe trend. Do you eat out for every meal? Grocery shopping and cooking at home can easily save you hundreds of dollars each month. Even a few small sacrifices here and there can add up to big savings over time—and can make treating yourself occasionally that much sweeter.

  1. Do you have any dependents?

Since the average age for having children is on the rise, you may be planning to wait until your late 20s or 30s to have a baby—which means you actually have fewer financial obligations now than you will later.

Of course, you could argue that you’ll hopefully be making more money by the time you decide to procreate, but there are no guarantees that you won’t be in a similar net income position to where you are now. When you have kids, your expenses are guaranteed to multiply. So take advantage of your carefree, childless years to set up your savings account for success.

  1. Are you in good health?

Unless you have a chronic health condition, chances are your medical bills and insurance premiums are lower in your 20s than they will ever be again. Again, the fact that this bill is relatively low now is an opportunity to throw a few extra dollars toward your safety net each month.

Taking care of your health can help your finances in more ways than one. “Eating out all the time can lead to health problems and can drain your finances,” writes Jeff Rose at “Learn how to plan meals and how to cook, and you’ll be healthier and saving money.”

  1. Do you have a mortgage?

If you answered “no,” this is the best reason of all to start saving now. Why? A mortgage saddles you with regular monthly payments for many years. Buying a house can be a great investment opportunity, but if you’re not ready for that financial commitment, think of ways to cut down on your housing costs (living with roommates, choosing an apartment in an up-and-coming area rather than a posh city neighborhood, or even spending a few months in your parents’ basement while you work and save money). If you save now, you’ll be glad for the extra cash when you are making that monthly mortgage payment.

Bottom line?

The most important thing to understand about saving money in your 20s is that the earlier you start, the more time your money has to multiply through the miracle of compound interest and investment returns. “Contributing to your 401(k), especially in your early twenties, makes retirement savings incredibly easier throughout your entire adult life,” writes Trent Hamm over at The Simple Dollar. “It will take the pressure off in your thirties, forties, fifties, and sixties.”

And the habits you cultivate now will make or break your future fiscal responsibility, so it’s important to set a precedent of saving—even if you’re only able to put away a small amount each month. “Your wealth in your thirties and forties will be largely determined by the financial decisions you make right after college,” writes Kyle Taylor of The Penny Hoarder. “The pressure is on for you to make decisions that will ensure your security and independence later in life.”

The good news is that saving money doesn’t have to mean big sacrifices and life changes. Using an app like Dobot to automate and simplify your savings is a great way to get started. Get set up once, watch your savings grow, and feel confident that you’re building a great habit—and a solid foundation—that will help you the rest of your life.


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