7 Financial Moves to Make in Your 20s

by Miranda Marquit · 58 comments

people in their 20s
We know that public education today is short on the subject of financial literacy, so unless parents are teaching kids about finances, many youngsters are finding out about good financial decisions the hard way — through making mistakes. I just turned 30, and I wish I had done quite a few things differently. The following are 7 financial moves to make in your 20s that I wish I had made. If you want to increase the chances of prosperity down the road, do it, and remember to teach your kids:

financial moves in 20s

  1. Live Within Your Means: This seems terribly obvious, but for many, it isn’t. I know. I spent the first three years of my 20s engaged in instant gratification, using my credit cards so that I didn’t have to limit myself on food, clothes or fun. Cleaning up that mess took almost the rest of my 20s (until I was 27), and set me back some. Start now to live on a budget that allows your outflows to remain smaller than your inflows.
  2. Pay Down Debt: The average college student has $4,138 in credit card debt, according to Sallie Mae. This doesn’t include car loans, student loans and other debts. If you have debt, work now to begin paying it off. (Here are 25 tips to help you pay down debt)
  3. Develop a Savings Habit: If you haven’t been saving money since high school (I have my seven-year-old son saving part of his allowance now), your 20s is a good time to develop a savings habit. Consider the money that goes into a savings account an essential part of your budget (tip: you can even make it automatic by diverting a monthly amount into savings). Start with an emergency fund and go from there.
  4. Begin Investing: I know people who opened an IRA in high school, once they got their first jobs. Sadly, I am not one of those people. I did, however, open a Roth IRA in my mid-20s, even though I didn’t put much into it to begin with. The earlier you start investing, the more money you will have down the road, thanks to the awesome power of compound interest. If I had started just five years earlier, I could have thousands more in my retirement account than I do now.
  5. Cultivate Marketable Skills: Your 20s is a good time to cultivate skills and education that can benefit you down the road. Consider what skills will be in demand in the coming years, and consider what you enjoy. I am fortunate enough to have earned a degree in Communications, and go on to acquire a M.A. in Journalism. These skills allow me to work from home as a freelance writer, supporting my family while my husband works on a Ph.D. — so that he can enter a field with growth-potential: the environment and public health.
  6. Establish Credit: While you don’t want to get out of control with the credit cards, it is important to start establishing credit while in your 20s. Be careful, though, that you work towards establishing the good kind of credit. A credit card, for example, can be one of the most effective ways to do this, but only if you pay off the balance each month. You can also get a small auto loan or other small obligation that you can make monthly payments on. This will help you in the future as you buy a home, and even as you look for good deals on auto insurance.
  7. Choose Your Life Partner Carefully: While you don’t have to see eye to eye on every financial issue, you should still choose a life partner that has the same goals and values as you. Even if your partner has issues now, you are on the right track if he or she is working toward financial improvement, and you can support and encourage each other. If you plan on combining your finances with your spouse, communication and honesty are especially important.

Finally, don’t forget to live a little. Money is supposed to be used, in part, for your enjoyment. There are many frugal travel ideas (consider Peace Corps, teaching English abroad and similar opportunities), as well as low-cost entertainment (camping, discount movies, going to the park) options. If you are paying tuition by the semester, and have room in your course schedule, take a class just for fun. You want to learn how to use money so it benefits you now and in the future, rather than letting it make you a prisoner.

Saving money is about freedom, and doing it early in your 20s will get you there that much quicker.

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{ read the comments below or add one }

  • DNN says:

    regardless of anyone’s age it’s never too late to get that side hustle going.

  • Thias @It Pays Dividends says:

    If you are able to begin saving and investing in your 20s you are putting yourself way ahead of the curve. You are allowing compound interest to work its magic for a longer time period and instilling good habits that will pay huge dividends later in life.

    • David @ MoneyNing.com says:

      A big YES to compound interest! I’ve been at the investing game for more than a decade now and it’s definitely worth the upfront effort!

  • Clementine Isabella Sophie Florence Cecelia Marie Grace Emily Charlotte Smythe-Worthington says:

    I got my 2nd PhD when I was in my mid twenties and I was lucky to have parents who could send me to Yale and Harvard. I am in my early thirties and I have 2 twin boys and I know how to budget even when I was 17 and at Yale. You are making stereotypical assumptions and generalizations.

  • konrad says:

    Think of it this way. If you can only save 10% of your income, then that means it takes 10x as much time to save as it does to spend it (ie you need to work for 10 days to have 1 off “for yourself”).

  • Vincent says:

    I am 28 yrs old. Here is my life story..
    I am from Kenya. I am neck deep in debt and have been sinking much further everyday. I got caught up by cheap credit after i got my first job so i took credit cards, bank loans and sacco loans and lived way beyond my means. All the investments i tried seemed to fall one by one so i did some refinancing and started afresh. I cant tell you what i did with the money coz i got nothing to show for the over $50000 debt i am in. I started straining some time around 2010 when things i could do with ease like paying rent started to become hard so i moved to a smaller house. Even still, i still continued to make ends meet and to make matters worse,..Intrest rates in my country shot up a while ago so did my repayments. I even quit drinking so that i could better manage my debts but even still its not easy.It is when my car got repossessed by creditors that i sought help from my parents to bail me out. I just wish someone had told me taught me all the above. I have restructured some of my debts as at of now…and i hope never to get into the same situation ever again

  • john says:

    Peace Corps as a “frugal travel idea”? you clearly have no idea what peace corps is about… it is far from a “travel idea” though it can certainly be “frugal”

  • Realistic Girl says:

    The dollar will eventually be devalued to nothing and paper currency will be useless. So let me ask this: where will your Roth IRA, all your investments in the stock market, and your paid-off credit cards get you then? Probably better to buy gold, get a goat, and plant a garden, people. Let’s not pretend that the status quo–house, car, kids, savings, retirement–will stand in this “great” nation for much longer. Don’t kid yourselves.

  • wackes says:

    Maybe,you will think that I am cheap,but there is only one rule:
    you get 1500 dollars a month,you spend less than 1500 dollars a month.
    Is it hard to understand?
    You spend more than you get,you’re gonna owe money ,lose your freedom and get into trouble.
    People thinks that you can get money out of thin air(mortgages,insurances,microcredits…all with very high interest),it only works for the banks.You borrow money,you’re gonna pay a lot of money to get it before starting to pay what you borrowed for.Does people believe that banks are philantropists?Maybe commercials wash very clean people’s brains(if not why spending so much money on it).
    The money you get for a month,you put it in a bag for the month,and when it’s gone,it’s gone(except for eating,it just about surviving not wasting money).No more.If you see there’s just a few remaining you will be more careful about buying unuseful crap.
    Before the banks borrowed everybody some money,people had just the money in a bag or anything else for the month and had to be careful with that.Maybe it seems for modern people to be harsch,but at least less people get kicked out from there house.
    So just spend less than you get,it’s elementary school math.

  • Sharief says:

    I am from the banking sector and live in Dubai , a haven for people to live above their means , an average middle class working employee is eligible for a loan that is 20 times his or her salary and banks aggressively chase customers for credit cards and loans. Cars are dirty cheap , considering the price of gas here , which allows almost everyone to go ahead and buy fancy cars. (Yes, BMW and Porsche is a lot cheaper in Dubai than in Europe). I was a victim of the credit card debt and had over $5000 in outstanding payments , over $15,000 in education loans and a $20,000 on my car and I was in my mid 20s. Thankfully, I was able to clear all of it , cancelled my credit cards , used my annual bonus to pay off my debt and I am proud to say I am debt free and seen my savings shoot up. There is no trick to this , First have a financial plan in place to pay off you debt, when i mean a plan you need to put together a plan which will state how much of your monthly paycheck will be allocated to pay off your debt and for how long, then stick to it. . Second maintain a balance sheet , several balance sheets are available off the internet to track your spending and if you have a credit card , do not forget to check your account statement twice a week.

  • Wilson says:

    This is all super basic stuff, and it surprises/frightens me that people feel they need to be told to do these things. I am in my mid twenties (smack dab in the middle of the target audience) with school loans as my only debt and a considerable amount of savings. Number 5, Cultivate Marketable Skills, is by far the most important and most complicated piece of advice on this list. Without skills, you can’t very well do any of the other things on this list. I am interested to see if this recent financial catastrophe will inspire my peers to see that 401Ks and IRAs are not the yellow brick road to wealth that financial advisors preach. I remember one as a guest speaker in one of my classes in college convincing 90% of us that a $10,000 investment in a mutual fund will be $1,000,000 in 40 years. He failed to mention that the “awesome power of compound interest” works both ways. If the market takes a 50% dive when you invest $10,000 at 22, you only lose $5,000. When it takes a 50% dive when you’re 62, all of a sudden you just lost $500,000. If you were counting on that money for wealth, then you’re out of luck. Maybe my fellow 20 somethings would realize that now is the best time to invest that $10,000 in themselves. Start or buy a business. There are many SBA lenders that will work with you to make the deal work. Or save up a little more and buy a small rental property. If it doesn’t work, so what? You’re still young and have time to cross your fingers and rub your rabbit’s foot and hope your 401K can survive until you can withdraw it without penalty. At least take a shot at financial independence before you have a spouse, kids, and a mortgage (which is another sham. “Sure I’d like to pay $450,000 for a $200,000 house over 30 years. Sign me up.”) I don’t know, maybe I’m too young and optimistic.

  • Katie says:

    I’m 24, saving every month; I have a pretty good amt saved (~15K), but still owe over $61K in student loans and just got a car loan for $13K. I’m also contributing 5% of my salary to my retirement acct. My student loans feel like they’re crushing me. I mean, I can make the payments easily, but I want to pay them off NOW. There’s just no way I can afford a house and pay my $600/month student loan bill. If I had the option to live w/my parents, I would, but unfortunately I’m 6+ hours away. So, I’m living with a roommate, after learning my lesson last year, that it’s simply not worth it to live alone.

    • Kory says:

      You should read my comments above.

      Manage your cash flow and you will not feel as stressed out. If your student loans are $600 per month on $60k, mine were only $450 per month on $60k. Try to either consolidate them or get a lower interest rate or longer term to reduce that $600 per month.

      Regarding your car payment versus savings. There is no point in paying a $300 or so per month car payment at 4-5% and then have more than enough money in savings to pay off that loan when savings are returning 0.25% or less. You would be best off investing your savings at a higher rate (possibly higher than your car loan) or maybe you may decide that the best option is to take your savings and pay off the loan with the highest per month cost, which is probably your car loan. To calculate that figure out how much per month you are paying per $1k. $13k at $300 per month means you are paying $23.08 per month per $1k of debt. Let’s say one of your student loans is for $20k and costs $200 per month – this means you are only paying $10 per month per $1k of debt. In this case you would be best off investing at a higher percentage or taking your savings and using it to pay off your car.

      Does that make sense?

  • LifePartner says:

    Thank you for being inclusive and using the terms Life Partner and Spouse. It made me smile.

  • John says:

    Some sensible advice for young adults.

    I am a financial planner in Australia. Many of my clients have children in their 20’s, as do I. It is apparent that young adults of today are probably less educated on basic money matters than previous generations, at a time when there are more pressures to spend than ever before.

    Keep up the good work. I will tell my daughters to have a look at your Blog.

  • Ricky Bobby says:

    My fiancee and I are doing the unthinkable… We moved back home with my parents to save extra money… I make ~80k a year and my fiancee ~60k. We also purchased an investment property and got a 30 year loan @ 3.75%. I sold my Infiniti G35 and we share her Acura RSX now… I paid off all of my consumer credit card debt and am helping my fiancee pays off her car loan and credit card debt too. Our goal is to pay for our big purchases with cash instead of leveraging ourselves.

    If you want to see our house check out midgett realty / Utopia… 7 weeks already booked next year 🙂

    I started a Roth in my early 20’s and did well till the crash. My Roth-IRA has taken huge hits but I’ve also been able to save additional money in a brokerage account through E-Trade. E-trade also has great online training seminar’s to help explain financial literacy. Disclaimer: I don’t work in the financial services industry.

    How much are you willing to sacrifice??

  • Matt says:

    The Roth IRA is my most difficult area right now. I am saving up an emergency fund to be around $10,000 and I am also paying off $20,000 in Student loan debt. So I am finding it very difficult to contribute to my ROTH IRA. I plan to post on my Roth IRA neglect soon. Any advice you would offer me?

  • Sun Lai Yung says:

    Thank you for the insight. Wish I had this info 30 years ago. I started saving only at 35. Since then i have come a long way and i am considered wealthy and with a Masters in Economics. However, i wasted a lot of money on frivolous things in my 20’s and early 30’s. As rightly pointed out, i have a good partner who is a finance major and we save and invest. Every 20 yr old must read this article.

  • alfred kelley says:

    check me out on myspace.com/alfredkelley

  • alfred kelley says:

    I’m 19, and am aggressively saving my money now. I will be finding a 2nd job tommorow- to save even more. By 21- i want to be independent, and out of my parent’s house. From age 16 to age 19- i invested my money and lost thousands- so now im focused on saving my money. currently i have a work at home job, and so tommorrow i will try to get an outside job. When im 21- i will go to hollywood to pursue acting/stand up comedy- working 15+hrs/day to be successful with that, and working pt- with my work at home job. The great thing is when im their in hollywood- i’ll be good financially- because of my aggressive savings from age 19 to age 21. which i’ll be 20- next month. I may leave my parents house right when i turn 21- or 3 mths or so after i turn 21. but i know it’ll be 21. hopefully right when i turn 21. i am working my ass off non-stop to make more money, and save more money. I have always been extremely serious about money since i was 16- but just didn’t save- i invested- in hopes of being rich. but i will save now, and later- invest a little from what i can afford to lose.

  • Name says:

    Do NOT listen to the people telling you to “build credit” and pretending there’s such a thing as “good debt”. That’s a lie. Listen to Dave Ramsey’s radio show, check his books out at the library, and don’t throw your 20s or 30s away on bad advice (read: lies) like, “Everyone has to have credit,” and “No one can live without credit.”

    • trekker says:

      I totally agree that carrying debt is bad (and yes, take Dave’s advice), but building good credit is important, too. Most people who buy a home will have to take out a mortgage. To make that process easier (or, even, possible), you need to have a credit record for reputable lenders to let you borrow. Simply owning and using a credit card does not have to mean going into debt. Never spend more than you can afford, and ALWAYS pay off your card in full.

    • Kory says:

      Actually you are quite mistaken. The only way to really get ahead in life is the proper management of debt.

      For instance, I have a student loan with a balance of around $31,000 that I pay 1.875% interest on. Your advice would be to pay that loan off to get out of debt. My advice would be to invest at a higher rate so that the loan balance becomes a non-issue.

      Now for those who are paying 15-30% on credit cards, well it is obvious that that is just plain dumb. It is hard to find investments that consistently return higher than credit cards.

      Look at getting cheap credit and using your hard-earned money for good investments.

      Also look at your income statement and cash flow statement rather than your balance sheet. Those who look at their balance sheet are concerned mainly about net worth whereas those who look at their cashflow statement are more concerned about managing income versus expenses. Most people getting into credit card debt are not properly managing their cash flow.

      Budgets are good to live by and people need to understand what “Pay yourself first” means. For instance, my income statement looks like this:

      -Investments (money to buy new investments)
      -Discretionary Expenses

      If you live by this model you can clearly get ahead in life…

  • Day trading technique says:

    Absolutely begin investing early. Also diversify your investments to make sure that your long term investments are low risk. Decide on a balance of high and low risk investments, depending on how much you have to invest and how long you will be investing for.

  • mark@vendingarticles.net says:

    Choosing a life partner is HUGE for a successful life. I have been blessed to choose well.

  • Len Penzo says:

    Great article, Miranda – and good points all. There is one more item I would add to the list: Develop a long range strategic plan.

    Of course, that financial road map is probably going change over time as life gets in the way, but it’s a really necessary and sensible task that all young adults should employ – if only to get them thinking about their future.


    Len Penzo dot Com

  • Peter says:

    I am so tired of hearing how “…public education today is short on the subject of financial literacy…”. This is a complete load of crud. You may as well say that public education doesn’t teach people the most economical ways of wiping themselves or putting bandaids on cuts. Can you do simple math? Can you read? Can you compare things and make an informed decision? Then public education has done its job. I won’t go into the fact that compound interest is covered in math (multiple times from elementary on), budgeting is covered in whatever “home economics” is called now (so the guys don’t feel too embarrassed to take it) which is required in most states I’m aware of, or that most social studies classes cover issues associated with stocks and investments as project ideas. The problem is that most people didn’t care when it was taught to them and have forgotten it, just like most people forget the bulk of the history they learned, forget the details on how the government works, forget the different types of poems, and forget about trig functions.

    Face it, we put effort towards things when they a) interest us or b) can’t be avoided. Most people “get religion” on finacial issues in their twenties and thirties because of b. You could teach it like they teach English for four years (how you could take two weeks of material and stretch it that far is another matter) and you’d still get a large part of the population screwing it up, because until it’s in your face it’s easy to ignore.

    • Chrystal says:

      I certainly think you have a point. I don’t think people are criticizing the public school systems for not teaching simple math, English, or comparative reasoning. I think what people are saying is that the many 20-something (or 30, 40 or even 50-somethings.) don’t understand the more complex intricacies of financial planning- the difference between a Roth IRA or a 401K, how and where to start investing, when to know when stocks are a good option or a risky investment.

      I agree with you that people need to take responsibility for their actions, spending and use a basic budget (that’s NOT rocket science.). However, as a 20-something with little parental guidance on finances I wish there were more resources offered in high school in regards to investing.

  • Brittany says:

    Huh. I must just run in a weird crowd of 20-to-23-somethings (very diverse economic backgrounds too). All of my crowd are financially responsible, the only one I know who carries a balance on his credit card had to buy really expensive books during an otherwise tough month, and most have modest (some huge) savings. All the financially irresponsible people I know are 28 and up, many of them my parents’ ages. Although I suppose it follows that given statistically that most people our parents age are also irresponsible with money that my peers, their children, would be as well, my crowd seems to have learned from their mistakes, even in the absence of guidance.

    So this begs the question–are my friends exceptionally weird or is all this “20-year-olds are awful with money.” criticism the result of current middle-aged people who are still bad with money projecting their youthful follies on those of us who took one look at them and decided to make better choices?

    Some statistics (http://www.money-zine.com/Financial-Planning/Debt-Consolidation/Credit-Card-Debt-Statistics/):

    -College students are more likely to pay off their credit card balance than any other demographic group studied.
    -The average cardholder has $5,100 in credit card debt. Now, $4,138 is bad, but people in their 20s are clearly not the worst age bracket at managing their finances.

    I could go on.

  • Julie says:

    I’m 27 and I agree with everything you say here. I feel I was lucky in my situation that my parents ingrained into me a sense of frugality. It never occurred to me that I could carry a balance on my credit card since my parents never did so. In fact, I remember one time I thought I wouldn’t be able to pay off the balance on one card by the due date when I was 18 which kept me up all night long.

    I think a lot of it has to do with how and what my parents taught me about finances, and I am very grateful to them for that.

  • Cd Phi says:

    I’m in my early 20s and I’m thinking about investing in a Roth IRA. Wow- as early as high school? They must be rich by now or have a pretty good financial safety net. Any additional information on how to go about or tips in general? It would be very much appreciated .

    • Dooley says:

      My college roommate fully funded her Roth IRA for the year as her graduation present from high school. Granted, her family was much better off than mine to be able to do this, but given that many of her friends were buying Gucci bags and the like, it was a good decision.

    • Miranda says:

      If you have a job, and file a tax return, you can open an IRA — including a Roth. One good way to do it is to look for low fee funds to put in your Roth IRA. You can usually get started at an online discount broker that charges very little, and that offers access to IRAs. Additionally, companies like Vanguard and Fidelity also offer IRAs and Roth IRAs that you can get started with by investing in low-cost funds.

  • Financial Samurai says:

    How about “stop slacking off and disrespecting your elders, punk.” That might help some folks.

  • Alcoholic Millionaire says:

    I would add that learning contentment, and not trying to impress others is a key factor. Many bad habits are created in a persons 20’s, and while it would be nice to skip the learning curve of life, I am the person that I am today because of the mistakes and lessons Ive learned along the way. Sometimes unfortunately we have to learn the hard way.

  • Austin says:

    Solid list. I second teaching English abroad since I’m currently in Japan. It’s a chance to travel and see the world, while still receiving a monthly paycheck. Not many jobs can claim that, right?

    Austin @ Foreigner’s Finances

    • MoneyNing says:

      I also know quite a few people who are teaching English abroad. The pay seems to be good, and it’s also a good chance to absorb foreign culture by interacting with the students.

  • Robert says:

    I think the “create marketable skills” is the most important tip here. It’s hard to be financially successful if you can’t work or generate income, so education is VERY important. But paying down debt is difficult while you’re still in college, so I think that should be put on the backburner until you’re financially stable.

    • MoneyNing says:

      I wouldn’t put paying down debt in the back burner though. It’s true that spending time gaining knowledge and learning skills are important, but the earlier you can start paying down debt, the better off you will be.

  • Penny Wise says:

    These are great tips, and many pertain to people of all ages. The most important point is that some basic financial education happens early in life – I really believe that financial awareness that is ingrained at an early age will become a part of your every day thinking. Thanks for the great article.

    • MoneyNing says:

      We definitely tend to stay with what we already believe in early in childhood, and actually, it’s much easier to shape our habits early rather than later, so take the time to learn early.

  • @ScottBradley says:

    These are all really great suggestions.

    I especially like the one about establishing credit.

    Knowing how to effectively manage your debt and credit cards is essential if you want to be financially well off down the road. This blog and many others are great places to learn and educate yourself on the topic of this.

  • Evan says:

    Only 28 here, I WISH I read this post when I was 23ish or 20…oh the things I would tell him/me.

    I think I would start with Idiot you don’t need to get the 3rd round shots.

    • Miranda Marquit says:

      Hahaha. I’d tell myself: “Really? You’re going to Vegas AGAIN? Maybe you should just stay home, pick up an extra shift and pay your balance off this month.”

    • MoneyNing says:

      You are still young at 28. Many people at 38 still wants to get three or more rounds of shots every Thursday night.

  • MoneyEnergy says:

    These are all the basics, that’s for sure. I started investing at age 22 (albeit not with much $) but I still rang up credit card debt (partly because I had to for school) on the side. Keeping the credit card debt down is really important. Almost 10 years later, I’m only just getting to a place where I can be credit-card-debt free. You don’t want it to have to take that long. Dear recent grads: Don’t think you’re special and any different. The debt will pile on for you just as quickly if you don’t keep track of how you’re spending.

    • Miranda Marquit says:

      So true. We all like to think that we’ll get some magical and lucrative job as soon as we’re done, and then we’ll wipe all the debt away. But the truth is that the habits cultivated will remain — and you probably won’t get that perfect job as a recent grad.

  • Matt says:

    I think people tend to overlook the power that a good spouse can have in your finances. And, the opposite is true: a bad choice can cost you more than just in the emotional, romantic sense.
    Glad you pointed this out.

  • Ken says:

    These are great suggestions. The $64,000 question…how to get 20 somethings to even think about saving and investing…you can’t get them off of their smartphones and Ipods. 🙂

    It starts with talking with them in their teens and it’s the parents’ job…it’s OK if schools want to join in as well.
    Good post.

    • Miranda Marquit says:

      Well, there are financial apps for smart phones and iPods 😉 So maybe they could learn that way. But yes, it is vital for parents to help out. I’m already teaching my son about money, hoping that he’ll do better than I did in my early 20s. But, my parents tried to teach me, and it took me years to admit they were right…

    • MoneyNing says:

      I think that if someone wrote an app that automatically shows their cell phone usage and relates that to money, or better yet, the cost of another gadget, they would get the message.

      For example, if an app would pop up every few days and tells the user that they’ve already used a total of 99 days on their iPhone, which cost them 40% of a new 26″ HDTV, that’d teach them to save a bit more and cut back on their plans 🙂

    • Sebastian says:


      I am a 20-something, 25 to be exact. I have a $6,000 dollar emergency fund set aside. $14,000 in my 401k so far and adding about 10% of my income to it on a monthly basis.

      I have zero credit card debt, $3,000 dollars in student loans left to pay off, down from $18,000 and I have $4,500 left to pay on my 2008 Honda Accord (with leather seats – yeah I did splurge on that) which will be paid off in full next June.

      In addition to this I will be opening an Roth IRA pretty soon.

      I do not have cable, nor a spartphone, nor an ipod.

      The answer to your question is two-fold:
      First, you need the right foundation from your parents and secondly, you need to have the willingness to do it. I mention the second because my older sister can’t manage her finances to save her life.

      • Sebastian says:

        Before I get hit by the grammar nazis – smartphone* not spartphone.

      • John says:

        Great job. Except for the 401k savings. Think about that investment vehicle a little bit. Other people/companies using your money to make 120% (doubling their investments every year) returns per year on real estate or stocks in America or developing countries until you turn the age of 67+ with only giving you the meger -8% to 8% avg. return each year while at the same time you are giving up 2.9% to 6.8%+ in interest to your car loans and student loans, and god for sake credit card loans. IF you pay into social security, let that be your “401k” income stream at the age of 67+. They will give you about $15k+ … UNTIL you are completely out of debt, own a house for shelter(geez that could be from $55k to a staggering $500k+…), live below your means (Target expenses should be less than $13k for a family of 3 if frugal), and have saved/invested in stocks or real estate to about $150k to $300k+ (depending on how long you wish to slave for/ how much you make in your career from your 20s on); you should not invest in a 401k until much much later or invest only what percentage your company matches, because when you are financially free and decide to make a part time job doing whatever the hell you love to do, that extra side cash will then be taxed at your lower tax bracket(15% or less now @ making capital gains income of around $13k+), and since you are now equating the below your means expenses target of $13k and making $13k+ from the avg 0% to 120%+ returns of your $150k-$300k+ investment account, (which you should only spend about 4 hours a month thinking about), any extra money you make part-timing with writing a novel/ blog, advertising your latest game creation, or giving people tours/ teaching others cool things should then all be put into your 401k when you feel like it, if you wish too, just to lower your tax bracket even further…Take your life/money into YOUR hands, now matter how small the amount, and you won’t be FEE-ED again and again, by banks or fund managers, or loan sharks, or even long-term 401k managers, or any other company/person in the world. Also with all your free time, money, and happiness; you can now become very very creative/inventive/social for maybe a business model, artwork, travel, or for Science.

    • PaulT says:

      Pure rubbish. Typical American Protestant/Puritan/Old Testament rubbish. If you’re in your twenties and thinking about financial plans, you were simply not raised right. Go outand see the world, leave this money nonsense to bleary eyed merchants and the lifeless drones who occupy commuter trains every day.
      (Yes, your parents.)
      Look around and see the real value of saving and working, versus being creative and thinking outside the box.

    • missy says:

      It’s not a good idea to stereotype. There are people in their 20s who can’t even afford a smartphone. It’s good that you want to give sound advice, but you can accomplish this without stereotyping and assuming. Thanks. Hope this helps.

    • Sarah says:

      Well, I am in my 20s but I refuse to get an ipod or a smartphone. My parents opened a savings account for me I think when I was 5 or 6. I learned at a young age to work for my money collecting pop cans, selling farm animals, and selling produce to save money. I put majority of my money in the bank and saved it until I was teen and had the opportunity to travel. I had to pay for most of my trip and my parents helped where I needed a bit more.
      Even when I got a part time job and babysitting jobs, I was still putting a part of my money away. I have continued to do so and even took overseas teaching jobs to help pay off college debt so I could travel the world, as well as save some money. My debt is nearly gone and I live within my means.

      Not all 20 somethings are attached to tech gadgets. I disagree with you that it parents’ job to start talking with their teens. It needs to start much sooner!

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