Your 20s are all about firsts—first job, first apartment, maybe your first time realizing how expensive laundry detergent is. While it can feel like you’re just trying to stay afloat, this is actually one of the most powerful decades to start building wealth.
Even small steps in your 20s can lead to massive financial freedom later. Here’s your go-to guide for what to do with your money in your 20s—so Future You can thrive, not just survive.
🛟1. Build Your Starter Emergency Fund
Life doesn’t wait. Before you start investing or paying extra toward debt, build a small emergency fund to keep you out of panic mode when surprise bills hit.
- Start with $500 to $1,000
- Store it in a high-yield savings account
- This fund = peace of mind
👉Read: Why Building a $1,000 Emergency Fund is the First Essential Step in Financial Success
🧾2. Claim Your 401(k) Match (It Comes First!)
If your employer offers a 401(k) match, contribute at least enough to get the full match before doing anything else. It’s free money and a guaranteed return.
- Common match: 100% up to 3-5% of your salary
- Don’t leave it on the table—once the year ends, it’s gone for good
👉Read: Roth IRA vs. 401(k) – Where to Start When You’re Young
💸3. Open a Roth IRA
Once you’ve secured the match, open a Roth IRA to take advantage of decades of tax-free growth.
- You invest post-tax money now and pay $0 in taxes later
- Start with what you can—even $50/month adds up
👉Read: How to Open a Fidelity Roth IRA (Use any reputable brokerage like Fidelity, Charles Schwab or Vanguard.)
📈4. Start Investing—Even a Little
You don’t need a ton of money to get started. The most important part is building the habit early.
- Use beginner-friendly platforms
- Keep it simple with index funds or a 3-fund portfolio
- Automate contributions so you don’t forget
👉Read: Grow Your Wealth from $50 to $1 Million: A Simple Progressive Investment Plan
⏳5. Understand Compound Interest (Then Let It Work for You)
The earlier you start, the more compound interest can do the heavy lifting for your future.
- Even a 10-year head start can be worth six figures
- Time in the market > timing the market
👉Read: Why Starting at 22 Beats Starting at 32: A Compound Interest Breakdown
💻6. Get Clear on Your Budget
Money flows fast in your 20s—especially when your expenses are competing with your social life. Use a budget that’s realistic and empowering, not restrictive.
- Try the 50/30/20 rule
- Track your spending for a month to spot leaks
- Adjust as your income grows
👉Read: The 50/30/20 Budgeting Rule for Financial Success
💳7. Avoid High-Interest Debt Traps
Credit cards are helpful tools—but only if you use them wisely.
- Pay off your full balance monthly
- If you have debt, prioritize paying it off ASAP
- Don’t finance your lifestyle
👉Read: Why It’s Important to Pay Off High-Interest Debt Before Investing (With One Exception)
🚀8. Build a Side Hustle or Skill Stack
Your 20s are the perfect time to build multiple income streams or level up your marketable skills.
- Try freelance work, reselling, tutoring, or gig apps
- Use extra income to save, invest, or pay down debt
- Stack skills that boost your earning potential
👉Read: How to Start a Side Hustle in Your 20s (Without Burning Out)
🤖9. Automate Your Finances
The easiest way to win with money is to stop relying on willpower. Automate as much as you can.
- Set up automatic transfers to savings and investing
- Use auto-pay for bills to avoid fees
👉Read: Make Saving Automatic (And Actually Stick with It)
👉Read: Automate Your Investments (So You Can Grow Wealth Without Thinking About It)
📊10. Start Tracking Your Net Worth
You don’t need to be rich to track your net worth. It’s the best way to measure your real financial progress.
- Use a spreadsheet or a tool like Empower
- Check in monthly or quarterly to stay motivated
👉Read: Why Your Net Worth Explodes After $100,000
Bonus: Your 20s Wealth Checklist
- 🛟 Emergency fund started
- 🧾 401(k) match collected
- 💸 Roth IRA opened
- 📈 Investing consistently (even small amounts)
- ⏳ Understands compound interest
- 💻 Budget system in place
- 🚀 Side hustle or income builder started
- 💳 High-interest debt avoided or paid off
- 🤖 Finances automated
- 📊 Net worth tracked
📚 Not in Your 20s? No Problem.
Explore other guides in the Money Moves by Decade series:
- Money Moves to Make in Your 30s
- Money Moves to Make in Your 40s
- Money Moves to Make in Your 50s (coming soon)
- Money Moves to Make in Your 60s (coming soon)