Are you finding it tough to manage your finances in your 20s? You are not alone!

The 20s is the time to experiment with your career, lifestyle and belief systems. It’s not a surprise that you don’t have a clear understanding of how finances work. During this phase of life, most people wouldn’t even concern themselves with things like savings, personal finance management, and investment strategies. But you are not like most people and can massively benefit by trying out some tried and tested money moves.

Here are the 5 smart money moves to make in your 20s.

1. Invest your money

The whole point of investing your money is to obtain an additional income or profit. Why settle for less when you can make your money grow exponentially?

Being said that, you also need to be willing to lose some money. Investment can sometimes be a zero-sum game. Meaning, the other person might take all the money and you will be left with nothing in your hands or the other way around. But, with time, you will learn to invest your money the right way.

2. Create a budget

Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Abraham Lincoln

As the above quote clearly describes, the more accurate your plan, the better your execution will be. When you create a budget before a financial year or at the beginning of a month, you are setting boundaries to your spendings. Cross this boundary and you are in deep trouble.

Action step: Maintain a sheet(online or offline) with Fixed Expense and Flexible Expense columns in it. With all honesty, keep updating it every month. Your sheet does not have to be fancy or complicated. Keep it simple and easy-to-read.

3. Start saving for retirement

Smart people start saving for retirement as early as possible. Some people open a 401k plan or Roth IRA right from the start of their career. But this is not the case with everyone. Most people struggle to find the right job right from the get-go. This prevents them from thinking in terms of savings and investment.

As a young person in 20s, you should focus on finding the right career or starting a business; basically, do something that pays well and also you don’t hate doing it. Have a goal to allocate more than 10 percent of your annual income to your retirement plan/plans. For instance, a person earning $30k a year should save at least $3000 for retirement.

4. Built an emergency fund

Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” George Soros

You never know what will happen in the future. No matter how much you put into your 401k or Roth IRA, it is imperative to set aside a stash of money in an emergency fund. If the unexpected is to happen, you will need a safety net to fall onto. How will you manage your expenses without an emergency fund? Do you have a plan?


Ask any person in their 30s and they will tell you the importance of maintaining a balance of saving for retirement, investing your money and enjoying your life as you do so. A well-rounded and balanced 20+-year-old is more likely to succeed later in life.