Top 10 financial moves to make in your 20s

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I know there are lots of lists like this out there (on the inter-webs) but I thought this was an especially good one, so I decided to summarize and pass along. I will put a hyper-link to the original article at the bottom. Hopefully you can skim this post and pat yourself on the back for having already checked-the-box on these basics. Your 20s are the perfect time to get started going down the right financial path (and avoid paying the stupid tax).  See below a link to a previous post listing the top 10 financial blunders (a.k.a, the stupid tax).

There are many advantages to being young – time and the power of compounding are on your side – but only if you see the big picture and take control of your financial future.


  1. Create a budget – you already know this one, but it’s probably the best tool to ensure you have a road-map to financial success. A budget gives you the freedom to spend on categories that are fully funded. Use to automate this process and don’t be afraid to fail – then make corrections and spend less than you make.  See below a previous post on


  1. Build an emergency fund. Start by putting $1,000 in your savings account, and only use it for emergencies!  (hint: a new iphone isn’t an emergency).  After you have paid off your consumer debt (e.g., credit cards, student loans, etc.) increase your emergency fund to 3-6 months living expenses.


  1. Start saving for retirement – there are many different ways to determine how much to save but if you want a simple rule then start with 15% of your salary (including any company match).  Save early and often!


  1. Pay off costly credit card debt – stop paying so much needless interest – sometimes they compound daily – which could lead to an endless cycle of making credit card payments for years. Set a goal to pay off these balances in 12 to 18 months – put it in your budget and stick to it! If you can’t resist the temptation to use credit cards then cut them up!


  1. Knock out your student loans – I don’t have any great advice here but I will encourage you to stay motivated and do your best to make extra payments to kick sallie-mae to the curb as soon as possible.


  1. save for a home. I really want you to have your dream home, but I also want you to realize your first (a.k.a., starter) home shouldn’t be your “forever” home. Start with a less expensive home – I recommend 2X your household income. For example, if your household income is $100,000 then aim for a max budget of $200,000 for your starter home. Save up 20% for the down-payment (to avoid PMI insurance cost) and then finance via a 15 year mortgage – preferably with a credit union (typically lower closing costs/fees).


  1. create a will. I know this a little morbid – but in some states (North Carolina for example), your estate will automatically go through probate if you don’t have a will. Probate involves going to court and probably means attorney fees – save your loved ones the inconvenience of probate and document how you want your final wishes carried out.
  1. Get health insurance. This is usually a no-brainer because an unexpected medical crisis could wreck your finances. Medical debt is the leading cause of personal bankruptcy.


  1. Decide on graduate school. This is a cost-benefit calculation in my book. How much will a graduate degree increase your salary? How much does graduate school cost? If the increased salary isn’t sufficient to “payback” the cost of graduate school in 3 to 5 years, then I recommend you forego graduate school.   Too many folks attend graduate school without a plan and without knowing if, or how much, this extra degree will increase their salary.


  1. ask for a raise. Know what you are worth. See my previous career advice post (see link below). Do your research and don’t be afraid to have a conversation with your supervisor about your performance and what milestones you need to achieve to get a raise.  Your career is your biggest asset.  Invest in yourself!


The original article is linked below:

time for change


2 thoughts on “Top 10 financial moves to make in your 20s

  1. On a few points in this article: 1) Retirement: Save more if you can – aim towards the the maximum, not the minimum! (Though do meet the minimum match for your employer’s maximum contribution.) 2) Number 1 and 4 go together: learn to spend within your means, and pay off the debt you accumulated before you learned this as quickly as possible. 3) If you want to go to grad school full time, look at assistantships at the school. There are schools that will waive tuition and give you a monthly stipend that is enough to live on if you’re willing to work 20 hours a week on campus. Or you can work at a university full time and take advantage of their tuition benefits taking classes part time.


    • Thanks for the comment- I truly believe that folks who sincerely apply financial stewardship and spend less than they make will eventually be successful and be debt free! Measure, adjust, repeat. . .


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