Whether you’re in school or just beginning your career, your twenties are a defining period in your life and can play a pivotal role in your financial well-being.  Many young people who don’t have backgrounds in financial management are uneducated on important behaviors that are essential to achieving financial stability, but making a few key decisions that have beneficial impacts can ensure that you enjoy your future with ultimate financial freedom.  When making decisions regarding your money, be sure to abide by these guidelines.

Create a Budget

The first step in being financially responsible as a young adult is to gain a firm understanding of your budget.  Analyze what you have, what you make, what you need to spend, and then use the remaining capital for day-to-day lifestyle purchases.  A good rule of thumb is to use the 50-20-30 rule in which you save 50% of your income for necessities and monthly payments, 30% for long-term investments such as retirement, and the final 20% for hobbies or other things you want to spend your money on after you have covered your immediate expenses.  For more details on how to successfully create a budget, check out our blog post here.

Pay off any debt

Some of the most common forms of debt that exist for twenty-somethings are student loans and credit card debt.  Dedicating a portion of each paycheck in order to pay off these debts may not be easy and take some sacrifice, but it will help you immensely in the long run.  You may not be able to completely eliminate these debts right away, but slowly hacking away at them will bring you happiness and freedom in your financial future.

Establish good credit

In addition to paying off your credit card bills, you also want to establish good spending habits in order to boost your credit score. Having a good credit score is essential in being approved for loans and keeping your interest rates low. Good credit benefits your budget, and improves your image amongst lenders as well.  In general, being financially responsible will improve your credit score over time, and will help you greatly if you begin to establish good spending habits early because it takes time to build a good score.  Be patient, make your payments on time, and your credit score will continue to ascend. If you’re looking to build your credit score but you’re not sure how, take a look at our blog on how to build your credit here.

Start an Emergency Fund

This may seem unnecessary, but you never know when an unexpected situation may arise that forces you to cough up some dough. Injuries, car accidents, foreclosures, and other unfortunate events are unavoidable, but being prepared will help ease your worry.  Devote a small portion of your income to emergencies and over time it will become a nice safety net for you when an emergency interrupts your life.  There is no specific number of how much you should have in an emergency fund, but a good goal is to shoot for around $500 dollars, and of course, it doesn’t hurt to always add more. Emergencies are inevitable, and planning for them before they even happen may seem like an unnecessary use of funds, but you will thank yourself when they occur.

Learn How to Live Within Your Means

Being in your twenties means chances are you won’t have all the money to do and buy everything you want (probably). This means it’s important to honestly assess what is a necessity and adjusting your lifestyle to what you can afford.  After creating your budget, you must determine what it is that you can spend your money on after taking care of the essentials and putting aside some savings.  This may mean that you have to eliminate any unnecessary expenses that are causing you to overspend outside of your budget.  Some ways to save money might be to buy groceries instead of going out to eat, sharing subscriptions or memberships if possible, and carpooling or walking for transportation.  The important thing here is to take care of your essentials and try to stick to the 50-30-20 rule, and if you are lucky enough to have any leftover money, it never hurts to save some more.


If you’re looking to gain more insight on successful financial strategies, or want to receive consultation on real estate finances, contact Citizens Law Group today!