Wrapping up your 20s: 14 Ways to manage your money

As you approach the big 3-0, you might be frustrated with the way things are going with your financial stability. Or you may be thrilled with how you're owning your financial situation. One fact is certain: you couldn't have predicted life would look like it does for you now back when you left your teens.

It's not just the world that's changed. Responsibilities started to kick in. You landed your first "real" job. You began adulting. You may have found your groove, or you may still be making minor course adjustments. This tastes like financial independence. Still, does it seem like your hard-earned dollars fly out the window before you've had a chance to give them a hug?

Pandemic lesson #1: Don't wait for a special occasion to tell someone you love them.

Lesser-known financial lesson: Don't wait another day to show your money some love. It's time to embrace your financial planning efforts and be proud of your money.

Take these financial tips to heart and you'll find you can boost your money mindset. And you'll love the direction you're heading.

Start Continue saving

Let's jump in the way-back machine — back when you were graduating high school. Did you have a savings account? In 2014, about 70% of your generation were already saving money. Don't stop now.

Even if you're busy attacking your debts, save up about $1,000 so you don't have to reach for plastic to cover the next emergency. You'll want to work your way up to a cushion of three to six months' worth of cash.

You've likely already figured out that life throws a shoulder during the game. Your savings goal right now should be weathering a big expense like a sudden job loss, sickness, or even your college roommate's wedding in Mexico. Prioritize bulking up your emergency fund.

Earn a real interest rate

You don't have to settle for the same savings account you had as a kid, or the checking account you got when you got your first regular paycheck. And you certainly don't have to settle for some megabank's near-zero offering.

Community banks and credit unions often offer favorable rates and prioritize you. Plus, they are right where you are, building up your local economy and supporting the same sports teams you played on when you were a kid.

You can get a bank account that refunds your ATM withdrawal fees and gives you cash back on your purchases, or even one that pays interest. And you can get it without paying for it. Making a switch now while your finances are — believe it or not — relatively uncomplicated will head you into the coming decades with an idea you're going to love: compound interest.

Quit investing in a big company's bottom line and show your money the love it deserves.

Take advantage of your 401k

So, what's your retirement plan? Who cares! You're 20-something!

But just because you haven't outlined a detailed retirement plan does not mean you shouldn't have a retirement account. If your company wants to contribute money towards the effort, let it. Open your 401k the day it becomes available to you.

Don't miss out on the employer match. Contribute at least what you need to contribute to get any money the company will match. If you're already eligible, sign up at the next enrollment, even if you start contributing just 1% of your income.

Bump it up another 1% next year, or when you get a raise. Keep climbing until you reach 15%. You'll notice that money deducted before your paycheck hits your account isn't missed as much. You can show your money your love by fattening it up a bit with compound interest. You’ll be happy you did when you proudly look back years later and marvel at how much it’s grown.

Pick up a side hustle or two

You're young. You have more energy than you will when you are older. You also may have more free time than you will when you start a family. Plus, unless you're not fond of more money coming your way, it just makes sense to let time work in your favor.

Turns out there are many little activities you can do to add dollars to your bottom line. Consider a side hustle, or even a second job, and see if you can't find a way to roll in an extra $500 each month. Again, compound interest (or debt reduction) is a big perk.

Take a new strategy on treating yo'self

Look at little habits that are costing you money and tweak your routine so it's easier to avoid them.

Keep yourself from going to the coffee shop. Dust off that commuter mug and brew a pot at home. Or, for a night out on the town, slow your roll and carry only cash so you don't overspend.

Trim your living expenses where you can. Eliminate common money missteps. If you just despise the thought of keeping a budget, well, there's an app for that.

Push the pause button on your wants

By your late 20s, a steady stream of income can give you the false sense that you can afford those new shoes that flashed on TikTok. Don't give in! Before you shop, make a list and stick to it. Reducing spending does not mean eliminating fun, but impulse buys are your enemy. If you see something extra you love/want/gotta have, give yourself 24 to 48 hours to decide. Chances are, your desire will evaporate away.

What's a very real love/want/gotta have? Your health. Get health insurance and focus on your preventative care. You may feel invincible some days, but on others, you may feel 30ish. (There are plenty of memes to back this up.)

Since we're talking about long-term wants, that retirement saving effort should definitely be a want now. In a few decades when you need it, you'll love yourself for prioritizing you.

Know your numbers

The tally of your debts may make you cringe, but knowledge is the first step in debt busting. It helps you shape a goal and track your progress.

If you want to know your numbers intimately, consider calculating your net worth. It's a helpful way to gauge your debt in comparison to your assets — all the good stuff you're adding to your life.

Check the score

Speaking of numbers, when was the last time you checked your credit score? If you're like 93% of your age group, you may already know your credit score.

So, when was the last time you reviewed your credit report? That's a slightly bigger task, but a really important one. You can get a free credit report annually, so if it's been more than a year, the time to review your credit report is now.

One in three Americans have errors on their credit report. From small bloopers like incorrect addresses to big concerns like someone using your social security number, your credit report is an entire life history of your finances. Show it some love regularly.

Pay down that credit card balance

What are the best credit cards? Ones where you don't owe anything. Find extra money in your budget to pay down your credit card. Over time, you'll save hundreds of dollars in interest.

For example, if you add $50 to your monthly payment, you can pay down a $2,000 balance at 16% interest nearly three years early, saving you $500! Compound interest can only be your BFF if it is incoming money for you, not money you are paying to your credit card company.

Having a credit card is not financial security. Having your credit card paid off every month is.

Pay it all down

Still carrying student loan debt? Still making a car payment? Obviously, you want to pay it all down, but if you have multiple debts, how do you tackle them all? Where do you start?

There are a couple of approaches to reducing debt that can help you work through it. It's no genie-in-a-bottle solution, but it can help you move towards financial freedom from debt.

Be intentional about paying down debt, and not adding to your existing debt. It's not the end of your debt forever — you might want to buy a home or even a new car. It will improve your credit score, increase your net worth, and get you into your 30s in better shape than you are in now.

Give back

It's a scientific fact: Donating time and money to things you love makes you happier. (Plus, it kinda makes the world a better place.) Get into the giving habit. Set up a donation to a local cause, even if it's $10 a month. If you have more spare time than spare change, set up a monthly volunteer gig.

We're not talking about extreme wealth that you're giving away like you're a billionaire. It's about aligning your time and money with your values. That's what your financial future should look like: a reflection of your values you can be proud of.

Start planning

Don't wing it with your money. If you've been skating by or spent one too many months living paycheck to paycheck, it's time to pull up those big kid work clothes and show yourself some financial love.

Short-term plan

Nothing's worse than going forward with a splurge only to have it suddenly hit you: “Oh, yeah, I need those new tires!” To head off surprises and keep you feeling in control, start each month with a near-term plan for your spending and saving. Call it a budget if that helps, put it on a spreadsheet if you need it, but become actively involved in managing your incoming and outgoing funds.

Keep in mind that an emergency fund is preparing for a bill that is coming due when you aren't expecting it. Include saving along with your subscription services, rent, and cell phone bills.

Long-term plan

Remember when you opened your first savings account and you wanted to save up for the latest Xbox^®? Well, now you're not 12 and instead of an xBox you're saving up for a lifetime of happiness.

Maybe you're making plans to start your own business. Or you've considered buying real estate for a future home. Maybe you and your roommate want to stop renting and put that money into a house payment. Even if you aren't in the perfect place yet to make those purchases, you're saving up, just like you did when you were a kid.

Your long-term goal has just changed, and so has your idea of "long-term." You're not just waiting for your birthday to roll around — you're planning to see another 70 or 80 of them.

Feed your brain

Managing money sounds daunting and even boring. But, understanding how it works can remove the mystery and help you feel in control of your destiny.

Find a free online course and include personal finance in your podcast lineup. Follow a blog that aligns with your current quest.

Maybe you want to add an IRA to go along with your 401k or figure out what's the real story on life insurance. This is the time to learn why you need it (even if you're single).

It's not investing for dummies if you are learning what you need to expand your financial mind. Seek out financial advice, or even a financial advisor or mentor to answer your money questions. Don't feel like you have to make financial decisions based on your Twitter TL or Facebook feed.

Think big

Snap your fingers and you're going to be 30. Think ahead to the next five or ten years and make a list of where you'd like to be financially.

Perhaps you want to increase your retirement contribution by $5,000 a year and carry zero credit card debt. Whatever it is, setting your destination will make it far more likely that you'll get somewhere. If nothing else, it will point you in the right direction.

Financial goals don't have to be carved in stone. They can change. You could be married or starting a family. What if your company wants to promote you and move you to Europe? You've gotten a sample of financial independence and you can plan on a larger scale now.

Bonus tip: Be grateful for what you have

Another common feeling in your 20s is that you thought you'd be farther along and have more personal and financial success. Says who? Younger you? You've learned so much about life (and money) in the past decade that you're crazy if you think you aren't where you need to be. Younger you didn't have a clue how your life (and the world) would change.

It's normal to feel gloom over what's lacking. But you can change your mood by shifting fretful thoughts toward sunnier realms. Practice financial self-care with as much gusto as your physical and emotional wellness. And don't worry. You have an entire lifetime of adventures ahead. You're just getting started.

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