7. Picture your future self
By now, you may have heard several different retirement terms—IRA, Roth IRA, 401(k) … OMG! It can seem like a lot to figure out at first, but here’s some good news: The type of retirement fund and how much to invest in your 20s is less important than starting a fund and contributing to it regularly.
When you start saving in your 20s, the amount you save and the interest you earn will compound, adding up to big savings—and a better chance at a comfortable retirement—later.
Keep other money goals in mind, but save as much as you can—as early as you can—for retirement. You can make this easier by having your retirement savings automatically withdrawn from your paychecks. Next thing you know, you’ll have a nice nest egg for your future self.
Pro tip: Starting your retirement savings in your 20s can make a huge difference in the long run—check out the chart.
8. Plan for your desired lifestyle
Certain decisions—like whether to rent versus buy a home—should depend on how you want to live your life. If you plan to stay in the same area for at least five years and have the funds for a down payment, homeownership can be a powerful way to start building wealth. But renting may be a better option for you if you value flexibility or aren’t ready for the responsibility.
Being a homeowner usually means spending a significant portion of your take-home pay on your home—you have to cover the mortgage, utilities, insurance, property taxes, homeowners association (HOA) fees, repairs, and maintenance. That may seem like a lot now, but if you start saving for it in your 20s, homeownership can be a reality for your future. Your 20s are for figuring out what you really want in life, and that includes how and where you want to spend your time.
9. Consider a side hustle
The gig economy has made side hustles a norm, especially among millennials and Gen Z. Lucky for you, it’s easier than ever to start one and increase your income. Even if you have a 9-to-5 job, a side hustle can help you make a little extra to put toward your goals.
10. Look for ways to pay it forward
Studies show that giving is good for your mental health, opens in new tab. It helps give us a sense of purpose in life, and we can get a mental boost when we do something that helps others. In your 20s, make finding a way to give back one of your goals. You can find ways to budget for giving, or instead prioritize sharing your time and talents to make the world a better place.
11. Don’t just invest—invest in yourself
Remember: You are your greatest asset. In your 20s (and especially in your early 20s), Truist head of financial wellness Brian Ford recommends investing in networking, knowledge, education, and skills to set you up for long-term success.
“Put money into investing in yourself,” says Ford. “It’ll pay greater dividends early in your career to get you on the right trajectory.”