a young woman holding a jar full of cash

How to Save Money In Your 20s

Your twenties are a difficult time in life to navigate, with challenges ranging from careers and relationships to relationships and finances. Balancing it all can be overwhelming, but luckily you have a little more control in one of those categories. Here are 5 easy ways to save money in your twenties:

Cash-Only Month

Doing a cash-only month will help you see where your spending happens. It’s psychologically harder to spend cold cash when you see it leaving your wallet, so is a great incentive to decrease your spending. A cash-only approach also lets you have a physical and visual idea of how much money you have for the rest of the month. Use information on your spending habits to budget and plan out the rest of your year.

Make Savings an Expense Category

Once you’ve figured out a budget and how you want to organize your expenses, it can be a good idea to make a category, especially for savings. It can be too easy to let savings be whatever is left over from your monthly expenses and end up with very little to nothing. We all know how unexpected expenses can throw us off, but prioritizing savings makes it easier to build an egg nest. Consistent contributions and the resulting increase in savings are motivating to continue healthy financial habits. Try placing savings as a top five expense category, somewhere near rent, bills, and car payments.

Every Dollar Counts

Assigning a job to every dollar of your income discourages mindless spending. Those last-minute impulse buys can really add up after a while, and keeping to your budget helps keep your spending habits in check. Make sure to have a discretionary, self-care fund category though, because too much discipline and no fun is no way to live. In addition, “every dollar counts” can be a helpful mindset to adopt if you ever feel guilty for spending money on “unimportant” categories. An impulse buy can be completely fine if you’re spending “impulse buy” money and have budgeted the rest of your month/year to accommodate that.

Rename Your Savings Account

Rename your savings account with the goal you are working toward, whether it’s a trip to Europe, a down payment on a house, or a new car! Seeing your goal every time you are tempted to pull out a few dollars extra from savings is a good reminder and incentive to not do so. And when you contribute, you’ll see the numbers rising and getting closer to your goal.

Contribute to Your 401K

If you are lucky to work at a job that offers 401k match benefits, take advantage. The money will go toward a tax-deferred account for your future use. Contributing the maximum amount is the best idea, but if that’s not possible, see if you can choose a small amount to contribute as a goal. If that’s easy, feel free to ramp it up. The savings will add up over time and your older self will thank your past self.

The sooner you start healthy financial habits, the easier future budgeting will be. While it might not be glamorous to think about retirement funds and excel sheets in your 20s, it is well worth it to work towards financial stability. Being clear and in the green is a satisfying feeling, so start saving today.