Saving money is something that’s very important to do throughout your life. Usually, your twenties are a time when you have very few responsibilities and you’re at the start of your career. It also means that you might have a lot more money to play with. And it’s good to try and save where you can. Here’s how to save money in your 20s.

A young woman learning how to save money in your 20s holding cash.

Learn the Fundamentals of Personal Finance

When you start trying to save money in your 20s, it’s important to know its value. And the value of money is certainly something you become more aware of when you start earning your own. It’s important to understand how to spend that money carefully and to make those funds stretch to help you afford whatever you need in life.

Money might not always be readily available, and having savings can certainly help prevent you from getting into certain situations that will have you struggling. The fundamentals of personal finance are something that you might learn through your own personal experiences. Or you can also find out from loved ones or online how to manage your money better.

Don’t Overconsume in Your 20s

Overspending is a very common temptation in your 20s even if you are trying to be saving money. With no responsibilities to other people and perhaps not yet owning a home, a car, etc., you will likely feel like you can spend more money. Overconsuming is easy to do, but it can stop you from putting aside money and building savings. Such savings will likely benefit from later in your twenties.

It’s always good to build up a fund of savings so that when you eventually come to make those big life purchases, you have the money to do so. Try not to spend all your money at once, and always aim to save something at the end of each month.

Pay Back Your Student Loans

Many individuals will likely have gone to college or taken various courses. These might require you to take out student loans and leave you with student loan debt. This is important to pay back as soon as possible.

Just like any other loan, this is a debt that needs to be paid. And the sooner you do it, the sooner the weight that’s lifted off your shoulders. By paying off your loan, you have the opportunity to save more money. That’s important as you head into the later years of your life.

Save Money in Your 20s with An Emergency Fund

Emergency funds are an essential part of how you can save money in your 20s. Your twenties might not provide many emergencies, but there are times when you might need to spend emergency money in the future. And that might be something that you can’t cover simply with one paycheck.

Having an emergency fund can help cover those costs and to give you a bit of financial breathing room.  An emergency fund should be something you’re constantly adding to when you can. And if you ever need it, make sure it’s a true financial emergency and not just because you’re running low on your monthly budgeted cash flow.

Have A Backup Plan for Your 20s

A backup plan is worth having when you’re learning how to save money in your 20s. It’s a financial plan that helps you make accommodations should anything change drastically and threaten your finances. It might be what you would do in case you lose a job, or if you have to move out of your current residence sooner than expected.

Having a backup plan is a good thing, even if you end up never needing to implement it. It should be loosely planned and flexible, just so you have some idea of what to do next in the event something major and unexpected happens.

How to Save Money in Your 20s: Start Investing

Knowing more about investment opportunities and how they work is important because it can end up providing you with the ability to make more money. Getting familiar with peer-to-peer lending, stocks, and ETFs is a good place to start when you’re learning how to save money in your twenties. Plus, it’s not necessarily something that requires too much disposable income to start doing.

Here are some types of investments you can look into to help save and grow your money in your 20s:

P2P Lending

P2P lending is a popular way to invest in loans from other people or businesses. A group of investors like you finance parts of loans in exchange for interest. With P2P lending, investors typically earn around 10% interest per year. The return on your investment depends on a variety of factors.

You can learn more about P2P lending and compare P2P lending platforms to get an understanding of how it all works on independent websites such as P2P Empire.

Because the minimum investment amount can be as low as $100, P2P lending is a great way to start growing money in your twenties.


When you invest in stocks, you’re purchasing shares of a company. You can buy and sell stocks on stock markets, which you can access through stockbrokers or through a trading platform like Robinhood. The value of the stock is determined by the ratio between supply and demand. The demand for a stock increases as the company meets investors’ expectations.

While you’re learning how to save money in your 20s it’s crucial to educate yourself about the stock markets.


ETFs stand for exchange-traded funds. They are basically baskets of stocks that are being traded on an exchange just like an individual stock. When you trade individual stocks, you are purchasing shares in individual companies. By contrast, when trading ETFs, you are spreading your investment across multiple companies, which helps to keep your portfolio diversified.

Diversification helps to minimize your risk of loss. Thus, if one company were to go bankrupt, you wouldn’t lose as much in an ETF you would if all of your money was tied up in that one individual stock.

Investing in ETFs is one preferred long-term investment strategy. The longer you invest, the more you will likely earn on your money. Therefore, investing in ETFs is a popular way to start saving money in your 20s.

You should also look into reinvesting any returns that you make. Especially since you’re young. Reinvesting is possibly a more beneficial option to choose at this point than using these funds for other purposes.

A Final Thought on How to Save Money in Your 20s

Learning how to save money in your twenties is not something that everyone does when they’re young. But it can certainly be beneficial and even life-changing to start doing so early. Use these tips to help get the most out of these years and to save as much money where you can.