Five Things to Focus On In Your 20s

I’m a firm believer that your 20s is the most important decade of your life financially.  This was a driving reason on why I chose to start my blog  This is a crucial decade; unfortunately, it is often the most abused decade as well.  Rather than saving, investing, and building a career, many 20-somethings instead use these years to rack up debt and enjoy a lifestyle beyond their means.  While there are many things that 20-somethings should focus on, here is a list of five that can get you started:

1. Spending Less Than You Earn

The most important financial habit that a young person can learn is to spend less money than he or she earns.  This is the most fundamental habit of one’s financial life.  Without mastering this concept, little else is possible.

In order to master this principle quickly, make sure your fixed expenses such as rent are not too high.  Then, begin to find ways to keep your spending (e.g., entertainment, dinner out, clothes, etc.) in check.  Use online budgeting software such as to track your spending effectively.  Make whatever adjustments are necessary in order to make sure that you spend less than you earn every single month.

2. Become A Regular Saver

Like the previous principle, try to make regular saving a habit.  The amount of money you put away is less important than the consistency that you save.  Setup your savings account to auto transfer money each month from your checking account into savings — even if it’s only $10 a month. The habit you establish is the important part!

As you continue to tweak your budget and lifestyle, and hopefully earn more money over the years, try to increase the amount that you save each month.  Rather than letting your lifestyle inflate as the years go by, try increasing your saving!

3. Become A Regular Investor

After you mastered the art of regular saving, it’s time to become a regular investor.  The most common method is through 401(k) participation.  If you have access to such a plan, it’s a great option for you because you can automatically deduct money from your paychecks.  If you don’t, then you have to manually move money from your savings to retirement accounts such as an IRA.

A great way to get started in the stock market is through ETFs (Exchange Traded Funds) that track the overall market.  An example of this is the SPY ETF, which tracks the S&P 500.  This type of diversified investment vehicles gives you a broad market exposure, and you don’t have to worry about researching individual companies.

4. Build Your Skill Set

Focusing now more towards your career, you need to continue to develop your skill set.  I’m a firm believer that most people learn more in their first few years in the working world than they do in four years of college.  Use the opportunities at work to develop skills that will benefit you both today and years from now.  Take on unique challenges so that you can gain the experience and the skills they offer.  The more experience and range of skills that you develop over time, the more opportunities will be available for you as you progress through your career.

5. Build Your Network

Just as important as your skills, the relationships that you develop will also increase your opportunities exponentially.  Networking, especially early in your career can be the difference between a fast track career and a stagnant career.  Get to know people in your company, in your industry, and even in other industries.  You really never know when a certain relationship will pay off (or if ever).  You may find yourself looking to relocate or switch industries in a few years, and these relationships will be excellent resources to help you reach your objective.

So there you have it, the five things to focus on in your 20s. If you have other ideas, please share with the rest of us. Thanks!

About the Author

By , on Oct 26, 2009
Kevin is the writer behind focuses on aggressive investing, developing income streams, money management and more with advice targeting 20-somethings. You can read more about his pursuits of online income and financial freedom.

Leave Your Comment (5 Comments)

  1. Peter says:

    You make some great points, especially the ones about being a regular saver and investor. I really wish I had started caring about my finances sooner, I can only imagine how much money I could have saved in my 401k had I started investing more in my early twenties. If you haven’t already started people – start now!

  2. AJ says:

    I need to do this.

  3. Craig says:

    Great tips, something I worked hard over the past few months starting saving in a mutual fund account and beginning an IRA for retirement. Even if it’s not a lot, I hope I am developing good habits. I like the automatic deductions from my account each month so it feels like I save without actually losing any money.

  4. kenyantykoon says:

    these are good pointers that i have not just read but i am and have been aggressively doing. it is a nice motivator.

  5. 20’s is ABSOLUTELY key to building a solid foundation for your future.

    It’s really important to work your B*TT off and always come in first and leave last. You need to start out of the gates strong and build a good reputation with your senior colleagues.

    Once you are perceived as a winner, you will go places.

    If you mess up your 20’s, you’re at a big disadvantage because there is ALWAYS going to be another young gunner they can hire and take your place.

    That’s the beauty of grad school. $1,000 giveaway anybody? We’re doing one at Financial Samurai for two winners who are applying to b-school/grad school


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