How to Get Your Finances Together in Your 20s: 9 Rules to Live By

Your 20s are such cool but kind of weird time. You’re suddenly given so much more freedom, but you also have so many more obligations. And one of the biggest things to hit you is the realization that you need to get your finances in order.

Because being cash-strapped in your 20s really isn’t fun. It makes your life feel constricted, it’s overwhelming, and and it makes you feel like you’ll never be moving towards something meaningful.

And that’s why now is the perfect time to start taking control of your finances. You’re building habits that’ll define your financial future, and help you to have long-term success.

Down below, these 9 money rules are simple, actionable financial steps that’ll help you achieve your goals and feel so much more confident about money. Also, small, consistent actions matter more than your income at this stage. So keep that in mind as you’re getting started and learning how to make these tips work with your current lifestyle.

1. Make a Budget That Works for You

Budgeting it’s about restriction. It’s about spending within your means, knowing where your money is going, and increasing your financial power over time.

It keeps you from having your card declining when you’re out with friends, and makes it so that you always have financial peace. And when you’re making smart financial choices in your 20s, this needs to be at the top of your list.

Also, there are so many ways to start a budget. So think the 50/30/20 rule, zero-based budgeting, or using budgeting apps like EveryDollar.

When you choose and stick to one of these budgeting methods, it really is an amazing way to reduce stress, have a sense of control, and have more freedom to plan ahead.

And lastly, take some time every month to revise your budget as income and priorities change!

Want step-by-step help? Here’s my personal guide on making a budget you’ll stick to!

2. Start an Emergency Fund (Your Financial Safety Net)

Once you have your budget, you’ll want to start building up your emergency fund ASAP.

An emergency fund is a certain amount of money that’s set aside for when a real emergency comes up. So think, your car just got a flat tire or you had an unexpected medical bill. But not things you can plan for like Christmas presents.

It’s a non-negotiable money rule and your first line of defense against unexpected costs that’ll drain your savings or put you in credit card debt.

And while it’s normally suggested to save up to $1,000, you can start small with something like $500 and work on building up towards 3-6 months of living expenses over time.

This fund prevents debt when life happens, so start automating withdrawals into a specific emergency fund savings account, or have a high-yield savings account.

3. Attack Debt Strategically

If you really want to understand how to save money in your 20s, then you need to know how to go after your debt efficiently, and not just pay bills blindly.

You don’t want to get stuck paying interest charges that are way too high, and trying to figure out why your debt isn’t going down as fast as it could.

It’s time to strategize. Here what you can do:

1. Reach out to your credit card companies and see if you can lower your interest rates.
2. See if you’re able to consolidate or refinance. They’re not quick fixes, but they can help.
3. Choose your get out of debt method. I personally suggest the snowball method by Dave Ramsey (I believe it’s seen the most success).
4. Have goals you want to hit so that you can get out of debt a lot faster.

Being debt-free is an amazing way to build real financial freedom and achieve your goals. So figure out how quickly you want to get there this week so you can start having peace of mind.

4. Build a Credit Score That’ll Open Doors

A good credit score is an amazing asset; it helps you to have long-term success and lower costs.

And if you really want to get ahead in your 20s and make smart money decisions, then you need to stay on top of what affects your credit score. So think payment history or age of credit.

Here are some simple steps that’ll help you build and keep up a good credit score:

• Timely payments on rent, bills, and other expenses.
• Staying away from new and unnecessary accounts.
• Paying off cards in full. Some suggest just having a low balance, but I think having no balance is so much better.

There are so many benefits to having a good credit score (like cheaper car insurance or easier apartment approvals). So make sure you’re checking your credit reports regularly and staying on top of payments!

5. Treat Raises & Side Hustle Money Like It Doesn’t Even Exist

One of the best financial steps you can take right now is to direct any new income toward your savings or investments instead of lifestyle creep.

Lifestyle creep is where your spending increases as your income goes up, and this is how you find yourself never getting ahead.

So start redirecting your “extra” income into a savings account, investments, or paying off debt. It’s an incredible way to maximize savings and achieve your goals so much faster.

6. Make a “Fun Money” Account for Guilt-Free Spending

Having a “fun money” account is a great way to responsibly enjoy your money without sabotaging progress.

It keeps you from feeling like you’re missing out and even prevents splurges by setting boundaries. So if you know that you only have $300 a month for fun activities or purchases, you’re gonna be mindful of what you’re spending it on. You’re going to know what’s worth it, and what’s something you won’t even care about in a week’s time.

So try creating a sub-account or even use the envelope method for your personal spending.

Financial planning shouldn’t feel restrictive. It should just help you to spend within your means while still having fun.

7. Automate as Much as You Can

Automations make financial planning in your 20s so much easier and help you to stay consistent.

And whether you’re automating bills, saving transfers, or retirement contributions, you’re removing any emotional decision-making and staying away from missed payments.

It really is a stress-free way to have long-term success and be proactive with your finances (in a low-effort way).

8. Invest in Skills That’ll Raise Your Earning Power

Your financial learning and growth isn’t just about saving; it’s also about increasing your income through self-investment.

And investing in education, certification, financial books, or even a new skill can really pay you back in dividends (pun intended).

So for instance, you can start with something easy like reading books by Dave Ramsey, or real financial success stories of people who got ahead with investing. You could learn new skills like digital marketing, coding, or communication. Or you could use side hustles as a skill-building opportunity (not just for extra cash).

It’s an amazing way to be proactive with your finances and plan for future financial success.

9. Begin Investing for Retirement ASAP

It doesn’t matter if you start off small, all that matters is that you start now. Because the power of compounding and early action is so powerful.

And whether it’s a 401(k), IRAs, or index funds, just start now in your 20s. It’s an amazing way to take control of your finances and prepare for your future.