10 Money Moves to Make in Your 20s

When you’re just starting out in your career, you may worry if you’re making the right decisions, especially when it comes to finances. You’re not alone. But creating an action plan can help you stay focused and learn to become a savvy money manager. Here are 10 tips to help you make the most of your finances and overcome setbacks that may occur.

1. Establish Your Goals

When you’re just starting out as a working adult, chances are you have plenty of ideas about what you’d like to do in your life, even if it may take some time to achieve your goals. Maybe you want to pay down student loan debt and start an emergency savings fund. Perhaps you dream of buying your own home. Designate which goals you can achieve sooner than later. For instance, setting up an emergency fund is a simple strategy that will help you build a foundation for lasting security.

2. Create a Realistic Spending Plan

You may not have a lot of money, but as you progress in your career, that will change. That’s why it’s important to get a handle on how you spend now.  Try using the 50/30/20 budgeting rule to track your money:

  • 50% of your after-tax income goes toward your needs such as rent, transportation, food
  • 30% toward your wants such as entertainment, vacation, gifts
  • 20% is earmarked for savings and debt repayment

Once you know where you stand, you can make changes as needed. If your needs are outpacing your income, or you’re saving absolutely zero, it’s time to readjust. Read How to Create and Stick With Your Financial Plan for tips to improve your money management skills.

3. Build an Emergency Fund

Having an emergency fund can keep you out of debt when the unexpected occurs – such as your car breaking down or a medical setback. Work toward saving a set amount every paycheck – such as $50 – until you save at least $1,000. You eventually want to save 10% of your income so you can build up to having three months of living expenses. Set up automatic payroll transfers to a designated savings account, preferably one that’s not connected to your checking account so you don’t dip into it.

4. Contribute to Your Future

While retirement may seem like eons away, start investing in your company’s retirement plan now. If your company sponsors a 401(k), your employer usually matches your contributions, which can range from 2% to 8%.  Always try to contribute up to the equivalent of the maximum match, because after all, it’s free money you won’t get otherwise.

5. Open an IRA

If you have earned income, but don’t have an employer-sponsored retirement plan, consider opening a traditional or Roth IRA. A traditional IRA is like a savings account with tax breaks because contributions and earnings grow tax-deferred until you start withdrawals after age 59 ½. Roth contributions are made with after-tax income, and they allow your earnings to grow tax-free if not withdrawn before you turn 59 ½ and the Roth has been funded for at least five years.1

6. Purchase Renter’s Insurance

According to Insurance.com2, renter’s Insurance is an extremely affordable way to protect your stuff at approximately $17 a month. It protects your belongings, from your laptop and TV, to jewelry and clothing. It also provides liability coverage in case anyone is injured in your home or apartment — a fall down the stairs, or a bite from your usually friendly dog.2  Our insurance agents work directly with top insurance providers, gathering quotes, coverage options, and discounts to find the policy and price that’s right for you. Visit schoolsfirstfcu.org/insurance to learn more3.

7. Avoid Debt Pitfalls

Like many people today, you may have some debt you’re trying to pay off. Be careful of using more than 30% of your credit limit and avoid high-interest credit cards because they’re harder to pay off, especially if you’re making minimum payments. Learn to lean on your emergency savings, establish a budget and stop using credit cards if you’re digging a financial hole. Read Five Tips to Get Out of Debt in the New Decade to learn more about smart ways to manage and pay off debt.

8. Put Your Student Loan on Auto Pay

Automating your finances is a great way to ensure you pay your bills on time and avoid late fees, which can affect your credit score. If you have a student loan, consider using an auto-debit plan. Usually, your lender will offer a discount for setting up automatic payments.

9. Learn About Investing

A proven way to build wealth over time is to invest in the stock market. The best way to get started is to invest in your company’s retirement plan. Then, to learn more consider taking a class, reading an investing book for beginners or avail yourself of the many online resources available to you.

10. Meet with a Financial Advisor

No matter if you have a lot of money or not so much, developing a financial plan can help you work toward your goals. A financial advisor can help.




  1. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. 2. CA Insurance License 0I19344.

Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or GreenPath Financial Wellness counselor who can help tailor a solution for you.

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