5 Money Rules Every 20-Something Should Live By

by Connie Mei · 8 comments

young adults
Your 20s is definitely one period of your life when you experience the most change. Graduating college. Moving into your first apartment. Getting your first job. There are many milestones in this decade of your life. It’s also an important time to start building a healthy foundation for the years ahead and an integral part of that is your finances.

As a 20-something, you might not be thinking much about money. Your motto in life might be ‘YOLO’ or you only live once. While you should have fun in your 20s, it’s also important to make smart money decisions. What you do now can have an impact on your finances years down the road. If you’re a 20-something ready to get serious about money, here are 5 money rules you should live by:

Live Within Your Means

No matter how old you are, the number one money rule you should follow is to live within your means. Simply put, don’t spend more than you make. Getting yourself into debt is easy but getting yourself out of it is much more difficult. Don’t put yourself in that situation and learn to create a lifestyle that is sustainable on your income.

Start an Emergency Fund

Life can be very unpredictable. That’s why you should prepare yourself for anything. Having an emergency fund will make these unplanned moments much easier. You really never know what can happen and you want to have a buffer to help pick yourself back up in case you need to. Start small with your emergency fund and ultimately aim to have three months of expenses on hand.

Monetize Your Passions

You might not have the job of your dreams in your 20s, but it’s a good time to discover your passions. It’s also an even better time to discover how you can turn your passions into an additional source or eventually, your main source of income. In your spare time, hustle and figure out what it is you really love. For instance, if you love to write, start a blog. Your willingness to initiate could turn into something really awesome.

David’s Note: I’m a prime example of how a bit of bravery and some luck can pay off. I started this site while I had a full time job. I never intended for it to make serious money, but the site is now my family’s primary source of income. I love my lifestyle, but I never dreamed of working for myself building a website. I fell in love improving this site, and it just happened.

Do you have a passion for something? Get into it and see what happens. You never know.

Begin Saving for Retirement

You might not be thinking about retirement just yet, but the earlier you start the better off you will end up. The more you invest in retirement accounts now, the more money you’ll see in retirement later. Start by investing in a 401k. If your company has a match, make sure you maximize that.

Don’t Compare Yourself to Others

This isn’t just a rule that applies to money but also life in general. Don’t compare yourself to others. It’s easy to look on social media and get a flawed perception of reality. It may seem like everyone is doing well and affording extravagant things, but remember that everyone’s situation is different. Don’t try to live up to someone else’s expectation of what life should look like. Live well but spend wisely.

What is one money rule you think every 20-something should live by?

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{ read the comments below or add one }

  • Alexis says:

    Related to #1, I would recommend establishing a budget. Understanding how much you can afford to pay for rent based on income is a huge factor. Knowing how much disposable income you have each month will make it easier to live within your means and mpulse purchases are less likely to occur.

    • David Ning says:

      Having a budget can really cure a lot of headaches. And the surprisingly good news is that tracking expenses isn’t nearly as tedious as people think it is once you get used to logging the receipts!


    Nice Article, Thanks for sharing it with us.

    Your article reminds me of my 20’s period. There were many to do’s at that time. Dreams were at their peak. We didn’t
    realize how important that phase was for us.

    As many waste their time in this period on unproductive work, some who engages himself with the stream of his choice.
    Gets a bigger benifit rest of life.

    Really saving is one of the most important thing everyone should do. It is a good habit which must be taught from teen
    ages. Money is the thing we need in every cause, with it difficulties also cross with a ease. As we all know “Money is
    not everything, but everything can be bought by money.”

    ~ Harshwardhan

    • David Ning says:

      You are right – those who apply themselves in their 20s will reap the rewards when they get older. Whether it’s with career, knowledge, and lifestyle, compounding works even outside of money and investing.

  • freebird says:

    On #5 I think if you’re reading this article, you’re probably willing to make some moves now to improve your long-term future, so why not find a role model, mentor, or coach? Ideally this would be someone who is well positioned financially and who has followed a career and life path similar to what you envision for yourself. Find out what they think they did right, and what mistakes they or people around them made along the way, and if these apply to your situation, you’ll have some ideas. Sometimes our biggest mistakes are decisions we made not realizing their long-term implications, so having input from people who have been there done that can be very useful. I personally have to thank a co-worker who upon learning that I hadn’t enrolled in our 401k after three years of service, he brought me the paperwork and refused to leave my office until I filled out the damn form and sent it in!

    • David Ning says:

      You were lucky to find someone who was willing to help you freebird. Having a mentor will propel anybody to their goals much faster, but do you have any advice on how to find such a person?

      • freebird says:

        One key I found to identifying the right people is to ignore the hat and focus on cattle. Unfortunately that’s usually hidden from view. Also people don’t want to get into details, but that’s fine, you don’t need to know dollars, just having an idea of appropriate ratios and percentages is enough.

        Where I work I found the well-set people are senior levels who drive beaters. The guy who forced me to sign up for my 401k always bought used cars, and I made it a point to never drive anything better than his car. Saved me quite a bit over the decades. Now that I’m older and can give advice, if anyone is interested, I’m happy to share my opinions free of charge so long as we don’t discuss details. Very few of us would turn down a fan club, so talking about our financial priorities and rules of thumb to a receptive audience isn’t awkward at all.

        These days it may be even easier, just troll the blogosphere and find someone who’s in the same boat as yourself, maybe a few years ahead, who is pursuing financial independence. Comb through the archives, and if you have any questions or ideas, use the comments section!

        • David Ning says:

          Good suggestions on how to find a mentor freebird. It does take work, but many people can learn a ton by participating in the comment section.

          And good observation about used cars. Our society can save so much more money if we only reduce our house and car payments.

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