Managing your own finances in your 20’s can be confusing. Where do I start? What do I need to do? How do I make sure I’m setting myself up for success, and not making decisions I’ll regret later? Let’s go over 10 money goals for young adults to work on in their 20’s.
Did you just graduate from college? Check out this related guide on HOW TO START MANAGING YOUR FINANCES AFTER GRADUATION!
10 Money Goals for Young Adults
1. Use a High-Yield Savings Account
Opening up a high-yield savings account is a quick and effective way to help your money grow automatically.
The interest rates on high-yield savings accounts can be 20 to 25 times higher than what traditional savings accounts offer.
Investopedia
While these interest rates vary depending on how the market is performing, a high-yield savings account with a good rate is a very easy way to make money on top of the money you have sitting in savings. If you have money sitting in a traditional savings account, frankly, you’re missing out.
Not sure where to start? Here’s a list of some of the best high-yield online savings accounts out there from NerdWallet.
2. Contribute to a Retirement Account
While retirement can seem like a lifetime away, beginning to contribute the money needed to do so now will help a lot in the future.
This could be a 401k set up through your employer, for example. If you do have a 401k through work, make sure to learn what your company matching policy is. Set a goal to contribute at least the percentage amount that your company will match and get that money!
Learn more about different retirement account options from Her First 100k here.
3. Learn How to Negotiate Your Pay
Did that just fill you with a little bit of dread? Same.
Negotiating your pay can be scary, especially in a world where historically women and people of color are paid significantly less, and where in your early 20’s you’re likely new to the workforce. Many people just starting out their careers are scared to negotiate, in fear that it will cost them to lose out on a job opportunity with a company that they really love.
Here’s the thing – a lot of the time as you grow and move within a company, your increase in pay is based on what you previously made. What does that mean? If you plan to stay at a company, even if it’s in a different position, negotiating your starting pay is extra important.
Don’t discount negotiating at every step in your career growth, though. Companies expect you to ask for more than they offer, and by not doing so you’re leaving money on the table.
Learn how to do your research on the market value of the position in your industry, learn negotiation tactics, and at the end always get it in writing before moving forward.
4. Save an Emergency Fund
An emergency fund (or “rainy day fund”) is a must for anyone taking control of their financial health.
If you were to suddenly lose your job tomorrow, how long can your savings continue to pay your expenses? While that may seem like a hyperbole, at the beginning of 2020 when “the world shut down” that was the reality for many people, and it continues to be as our economy tries to recover.
What about if your roof leaks? Your tires need replacing? You get in an accident and need to pay medical bills? You need some dental work done?
There are a lot of unknowns and sudden changes in life, and having a solid emergency fund can help you deal with them without worrying about the financial strain. Personally, I think this is a common money goals for young adults.
How much should I have saved up?
That varies from person to person and your other goals and comfort levels.
Some people say to start with $1,000. While that’s a good goal if you are just starting to save up, $1,000 isn’t likely to get you very far if something big happens.
Personally, I prefer to have 4 – 6 months worth of expenses saved. I mean bare-bones, pretend both Anthony and I have lost our jobs and we need to cancel our Netflix subscription and only focus on what we need to survive, expenses.
How do I figure out my recurring expenses?
Open up your banking app or website, and get out a notebook. Look through your banking activity and everytime you come across a payment that you make regularly (weekly, monthly, yearly, etc) write it down. Include what it is, the amount, and how often you pay it. If you have loans you have to pay, make sure to include those. Add an estimate of how much you realistically can get by spending on food and transportation each week.
Then, download this free recurring expenses calculator that I made and input all of this info!
This calculator will automatically total up how much you spend each week, every 2 weeks, every month, and every year on your recurring expenses.
Take the amount that you spend every month on these expenses, and multiply it by the number of months you want to save for in your emergency fund. That’s your goal emergency fund amount!
Interested in using the expenses calculator?
Download it for free here:
5. Reduce Unneeded Expenses
Now that you’ve looked at all your expenses to calculate your emergency fund goal, it’s the perfect time to get rid of any unneeded expenses you might be paying!
I once did this with a friend and she realized she was automatically paying over $100 on a wine subscription every single month, that she wasn’t even using! She had been paying this for months on autopay and had totally forgotten.
Do you have any streaming service subscriptions you don’t use anymore? Any free trials you forgot to cancel?
Take the step and stop paying for things you don’t need or don’t use.
RELATED: THE YOUNG ADULT’S GUIDE TO STARTING A BUDGET
6. Check Your Statements Regularly
It’s a good idea to make a habit of checking your bank statements pretty regularly. Especially in today’s world where people’s payment information can get stolen a million different ways, keep an eye on what transactions are taken on your accounts so that you can notice if anything happens that you didn’t authorize and call your bank to get it stopped.
7. Be Aware of Your Credit Score
Your credit score is key for everything from leasing a car to buying a house to taking out a loan and more.
Many banks offer ways to check your credit score right through their app, which makes it easy to keep an eye on what yours is doing. They often also give information on why your credit score is where it is, which helps your learn what you should/shouldn’t do to get it where you want it to be.
There are many ways to check your credit score without having it effect your score.
8. Pay Down Debt
This is definitely easier said than done, but I think one of the good money goals for young adults to set is to have a plan in place to pay down your debt. Student loan debt, consumer debt, well… any kind of debt can be overwhelming.
Now that you have an emergency fund set up and a high yield savings account going, take a look at your debt and work toward paying down as much as you can.
9. Set a Goal to Invest Your Wealth
On top of your retirement account (look at that, you’re already investing!) in your 20’s you should set a goal to invest. Is the stock market right for you? What about real estate (though that definitely takes a lot more to start off with)?
I’m certainly not an expert in this, but I love reading the advice and insight in investing from Kara at We Bravely Go!
10. Plan for a “Fun Fund”
Money isn’t all paying bills and preparing for your car to break down or for it to finally be time to retire – while we’re focusing on money goals for young adults here we need to recognize that money is also there as a tool to help you have fun!
Choose a fun goal. Want to go on a vacation this summer? Estimate how much it will cost, and begin to set aside money for that.
Not a big vacation kind of person? (I feel ya…) maybe instead set aside a certain amount of money to have a nice dinner out here and there, or figure out how much your hobbies and other fun things cost you each month.
Personally, Anthony and I love to cook a nice dinner together or go out for happy hour each week, so we make sure there’s some wiggle room in our food budget each week just for that. We also have some money set aside in a high yield savings account for a big future vacation we’re planning, so that we can enjoy the trip and not worry about how much it’s costing us!
Money Goals for Young Adults
There’s a lot to learn about money as a young adult, hopefully these goals give you a good place to start!
What financial goals are you hoping to accomplish in your 20’s?
If you’re no longer in your 20’s – what would you recommend as some money goals for young adults?
Note: Here at Dani Dearest, we are not finance advisors. You should not take any of the information here as personal finance advice. The information provided here is my own personal opinions and thoughts and should be taken as such. Thanks for reading!