Your 20s are all about change; graduating college, starting a career, exploring new relationships and living on your own. Many of these are tremendously exciting. I’ll never forget my first client presentation to six senior executives only a few months after starting my first job. I walked on air after impressing them with my research.
That said, many of these changes are stressful and costly. I racked up a massive credit card bill right after I moved to Washington, D.C. for that first job. I thoughtlessly swiped my credit card to buy essentials for my first solo apartment, shop for a work-appropriate wardrobe and splurge in D.C. bars and restaurants.
It can be tempting to put off saving money, but if you save small amounts early in your career, you create massive wealth for your future self. When you save and invest, your money makes more money on your behalf, and that’s an amazing thing! So let’s do this — here’s how to save money in your 20s.
1. Automate. Set up an automatic transfer to your savings account on payday. Start with the biggest amount you can — whether it's $20 or $200. Increase this amount at least once every three months (even if only by one dollar).
2. Invest. Yes, you need to start now! If you work for an employer that offers a 401(k) or another retirement plan, sign up immediately. Some employers will match your contribution up to a certain percentage. If you’re lucky enough to have this benefit, take advantage of this free money! If you’re new to investing, that’s okay. Here’s a primer on all you need to know.
3. Bring your lunch. If you pack your lunch four days each week, you’re saving $10 a meal on average. Compared to somebody who goes out to lunch every day, you'll have an extra $40 per week — which gives you over $1,000 to save each year. Make a “bring your own lunch” date with fabulous brown-baggers in your office to stay motivated.
4. Talk about money. Seriously. Women are curious about money but were often taught that it is a rude topic. A Fidelity study found that 92% of us want to learn more about financial planning; that means nearly every woman in your life is interested in talking about finances! Start the conversation by sharing posts (like this one!) and following financial gurus on social media. By sharing that you’re interested in saving money, you’ll get creative ideas from your girlfriends and hold one another accountable. Ban any shame and judgment from your money conversations and you’ll be amazed at what you can learn.
5. Stop comparing. President Theodore Roosevelt said, “Comparison is the thief of joy.” Social media gives us the amazing power to stay connected to friends and icons, but heavy use has been linked to depression. Scrolling through everyone’s life highlights can make us feel like we’re not enough — which can trigger emotional spending to make ourselves feel better, temporarily. Make a conscious effort to stop yourself any time you start comparing yourself to others; run your own race!
6. Track your spending. You work hard for your money and deserve to know where it goes. Popular apps like Mint, YNAB, and Quicken can help you understand if you’re falling prey to the sneaky ways we spend more than we mean to. Figure out where you’re spending too much, and divert those expenses to more important goals like your next vacation or your investment account.
I’d love to hear if you have any other suggestions to save money in your 20s. If you make saving a habit now, your future self will be so pleased with all the wealth created when you were just starting out. You’ve got this!
The Feminist Financier is on a mission to help women build wealth and own their financial independence, by improving financial literacy and taking the mystery out of money. Ms. Financier is also a shoe addict, travel fanatic, and wine enthusiast.