Smart ways to save money in your 20s

Why saving in your 20s matters

Saving early builds financial flexibility and reduces stress later. Small, regular contributions can accumulate over time, thanks to the habit of saving and the potential for money to grow with time. Getting started in your 20s helps you develop discipline that pays off as life changes.

The power of compounding

Compounding means your money can grow as it earns returns, and those returns earn more returns. The earlier you start, the more time your savings have to grow, which can matter more than the size of any single contribution.

Set realistic goals

Set simple, achievable targets like saving a small amount regularly and increasing when possible. Check your progress occasionally and adjust as life changes.

Smart budgeting habits

Track income and expenses

Keep a simple record of what you earn and what you spend. Seeing where money goes helps identify areas to adjust without feeling deprived.

Use a simple budget method

A lightweight approach—such as allocating funds for needs, wants, and savings—can keep budgeting manageable while still directing money toward savings.

Automate savings

Arrange automatic transfers to a savings container so saving happens consistently, even if you forget.

Debt management

Prioritize high-interest debt

If you carry debt, giving priority to the higher-cost balances can free up money for saving over time.

Consider student loans options

If you have student loans, explore available repayment options and reputable resources to understand your choices. Make decisions that fit your situation and goals.

Building an emergency fund

How much to save

Start with a small cushion you can access, and grow it gradually as circumstances allow. The idea is to create a safety net you’re comfortable with.

Where to keep it

Keep the emergency fund in an accessible savings vehicle so you can reach it when needed without sacrificing your overall financial plan.

Smart saving strategies in your 20s

Automate and optimize

Set up systems that make saving automatic and easy to maintain. Periodically review to keep things aligned with changing circumstances.

Take advantage of employer benefits

Learn about any programs your employer offers that support money goals (such as retirement plans or health-related accounts) and use them where appropriate.

Frugal habits that don't feel deprived

Identify inexpensive yet enjoyable alternatives for entertainment and everyday purchases. Small, consistent tweaks can add up over time without a sense of deprivation.

Investing early

Retirement accounts

Learn at a high level how different retirement or long-term saving options exist in your country, and how they fit with your overall plan.

Low-cost index funds

Understand the idea of low-cost, broad-market options as a way to grow savings gradually over the long term, without getting into complex strategies.

Side hustles and income diversification

Your skills and time

Consider simple ways to use your existing skills to earn a bit more money, then direct a portion of those earnings toward savings.

Reinvesting earnings

If you earn extra money, allocating a portion toward saving or low-risk growth can help your money work harder for you over time.

Financial habits for life

Regular reviews

Set a routine to review money goals and progress. Small adjustments can keep you on track.

Adjusting to life changes

As income, responsibilities, or goals change, adapt your saving plan to stay aligned with your priorities.