12 Best Financial Goals For Your 20's: Set Yourself Up For Good

To make financial progress in your 20s, you need to have a clear financial vision and set yourself up for success. You need to ensure to optimize your financial situation. These financial goals will allow you to become financially independent, free of debt, and have more money to save and invest.

33% of the millionaires made less than 100k. In fact, most are self-made and live pretty normal and modest lifestyles as opposed to what is illustrated in Hollywood.

This is great for you and me. It means we also don't need to create the next Amazon or Facebook to set ourselves up financially. It means we can make it too without coming from money. If you're reading this, I'm assuming you didn't come from money either.

It won't be easy, but you will build an incredible financial foundation with the right financial mindset and habits.

The 20s are the learning years, where it's okay to make mistakes, to discover yourself and try new things. Until you're suddenly 30 and everyone has expectations from you. The social clock is ticking is everyone reminds you to get a career, a partner, married, a house (in this crazy market?) or even babies!

If you are in your 20s and reading this, I am happy to say that we're not there yet. And that you are already ahead of most of us.

The big 3-0 is rapidly crawling, and some financial goals are worth pursuing to help you build wealth and financial security as you become older.

Of course, the 20s are meant to be explored and enjoyed. You should have a good time... responsibly!

However, keep in mind these 10 financial goals to pursue in your 20s as you progress through them.

Learn About Personal Finance - Become Financially Literate

To be financially successful, you need to understand personal finance and how it works. This means learning about the basics of personal finance.

This includes topics like budgeting money, investing, and how credit cards work.

Even understanding these topics at a basic level will serve you well as you grow older. It will help you build wealth and create a financial plan that will help you avoid debt and common financial pitfalls.

Financial literacy is the knowledge and skill to understand personal finance, saving, investing, and managing your money.

There are a lot of free resources online to help you learn about personal finance.

You may have already started and had some personal finance skills.

You need to find the time to use them and build on your financial knowledge as you progress through your 20s.

Establish the Habit of Saving Money

As you progress through your 20s, it's essential to start building the habit of saving money.

Saving money is one of the most important financial habits. It's often said that money saved is money earned.

It's a great way to increase your financial situation without an immediate increase in income. It doesn't matter how much you make if you cannot save any of it.

Unfortunately, too many of us fall into this lifestyle trap once we start making money.

Many people fail to save money because they have a lack of discipline when it comes to saving.

It's so important that you have savings goals in your 20s.

Think about what you'd like to purchase in the future. Maybe you want to save to invest, to travel the world, or make a down payment for your first home.

Here is an easy way to start saving money today.

Put a portion of each paycheck directly into a savings account. I like 20%. It gives you room to breathe and live.

Create a Monthly Budget

A budget helps you stay on top of your finances. It enables you to manage your money to know what goes in and out of your wallet every month.

It can seem tedious, but it's worth it. It might just be the most important thing you'll do in your 20s. Try out the 50/30/20 budgeting method.

You can use a spreadsheet or a free budgeting app.

I was always broke in college, and I remember not knowing where my money went. All I knew was that I was always ended short at the end of the year. I didn't even look at my money monthly...

Creating and sticking to a budget helped me see my expenses and save more money. I was able to identify ridiculous costs and cut them out.

When you're in your 20s, the chances are that you are broke, so you need to save as much as possible. Budgeting will help you do just that!

Learn to identify your wants and needs

Saving money can be hard when every purchase feels important. After blowing so much money on fashion, shoes, and convenience, I learned this the hard way.

Did I really need another pair of Yeezys, ripped jeans or another dad hat? It sure felt like it.

Do I still wear them today? Nope.

It's crucial to learn to identify your wants and needs. We all have wants and needs, but we often don't realize what a need is.

I'm all about splurging on things that make you happy, but it also means skipping the unimportant stuff. You cannot categorize everything as a need or you'll go broke.

This may mean, not buying a new car or phone every so often, fewer UberEats or eating out, fewer designer clothes, or fewer video games.

Fulfill your needs and take it easy with your wants.

Build an Emergency Fund

Building an emergency fund is one of the most important things you can do for your financial security.

An emergency fund is a large amount of money that you keep in a separate account that you can access when you need to.

Building this account when you start earning money is important because it's a way to protect yourself from unexpected expenses.

When it comes to emergencies, it's not a matter of if but when. You'll want to be ready when shit happens, and it will. From car repairs to home repairs and medical expenses, it'll happen eventually.

Depending on how stable your income is, you should save 3 to 6 months' worth of expenses.

Cut Costs Whenever Possible

Cutting costs is one of the best ways to have more money in your bank count in the early years. It's not always possible to increase your income, but it's often possible to cut costs.

Cutting costs as early as possible will set you up for a more comfortable future.

There are some small things that you can do that will save you a lot of money.

You can cut the cost of your cellphone plan.

You can cut the cost of your cable.

You can cut the cost of that membership you're not using.

You can pack up lunch instead of eating out every day.

Look at all your expenses and see where you could cut costs.

Even an extra $50 per month leads to $600 after a year. But I guarantee you'll be able to cut more than $50/month if you genuinely cut off the stuff you don't need.

Don't Live Paycheck To Paycheck

Living paycheck to paycheck is not fun, and it's also not sustainable.

When you live paycheck to paycheck, it's hard to save money. You're always looking for ways to make sure that you can pay your bills.

The problem is that there is never any money left over; therefore, no savings.

To avoid living paycheck to paycheck, you need to ensure that your income outweighs your expenses at the end of the month.

You'd be surprised at how many people would not be able to afford an emergency $400 repair.

The best way to avoid this is to save more than you spend by living below your means. It's tempting to go all out in your 20s when starting your first job but don't upgrade your life too much just yet.

You may have a great time now, but things rapidly creep up until you don't!

Find the right career path

I chose the wrong profession in college. I knew it mid-way through my degree, and I still forced myself to complete it. I thought, "maybe I'll like it once I start working."

While it was nicer to have a paycheck, I did not like it and felt stuck.

Fortunately, the skills I developed and my experience helped me find a new job after a year.

If your career does not feel right, please look elsewhere right away! The 20s are perfect for that because no one expects anything from you yet.

The chances are that you don't have a mortgage or children, so it's much easier to restart now than it would be in your 30s or 40s when your list of responsibilities is endless.

Of course, it's never too late, but the 20s are just a better time to switch careers.

You've got to make sure that the job or career you're pursuing is something you enjoy doing.

It can be tough to figure this out. Especially when you're starting in your 20s because you may not know what you're looking for yet.

That's why you should ask for around and try new things.

Find a job you like and go all in. Whether you want to be a business owner or work for someone, you'll likely work most of your life. Choose something you'll enjoy. Choose something meaningful to you. You'll be more likely to succeed.

Develop skills that can increase your income

For young adults who usually don't have much to invest in, saving money is the first thing that often comes to mind to build wealth.

But, saving money will only take you so far. You need to find ways to improve your income.

It could be a side hustle, overtime work or improvements in your current job that can earn you a bonus or a promotion.

During your 20s, focus on income growth, because the more money you make, the more you'll get to save if you continue to live below your means.

For example, let's say you save about 20% of your income.

On a 45,000$ after-tax annual salary, you'd be saving about 9,000$ per year.

Let's say you raised your salary to 70,000$ after a few years. The 20% is now 14,000$ per year!

Not only do you get to save more, but you also get to spend more!

Instead of having a spending room of $39,000, you get to spend $56,000. That's $17,000 more.

Now combine that with living below your means; you could easily save and invest more than 20% without feeling deprived.

Here are some skills that may help you earn more income:

Hard Skills

1) Software engineering/programming

2) Data analysis

3) Digital marketing

4) Writing and copywriting

5) Project management

Soft Skills

1) Public speaking

2) Communication

3) Emotional Intelligence

4) Negotiation

5) Conflict resolution

6) Teamwork

7) Problem-solving

I encourage you to find a few skills that interest you and that could help you earn that next promotion or job opportunity and focus on developing them. Any extra income will help!

Investing

I used to think people became rich by saving their money. That's how I was raised. My parents and the grownups around me were all terrified of investing because "you'll lose all your money," they said.

I thought, "what's the point of investing the little money I have, anyway?".

Instead, I overspent my money on clothes I did not need, eating out when there was food at home and partying.

I started investing at 23, but if I could go back, I'd invest in my TFSA or Roth IRA the day I turned 18.

It's never too early to start investing. You could even start with as little as $25 a month. What matters is consistency and time in the market.

Things will all compound in the next few years for you. All you've got to do is start and set it all up now.

You can invest in the stock market or ETFs/Index Funds.

If you want to keep it simple and still earn decent returns, you can buy an ETF or just use a roboadvisor like Wealthsimple. They do it all for you. And forget mutual funds no matter how much they are recommended to you by anyone. Their fees are way too high.

If you start now, you'll set yourself up for retirement or a big-ticket purchase in the future, like a house or a car. You'll have a safe nest for emergencies. You'll also most likely become a millionaire with your retirement savings.

I would open an investment account (TFSA/Roth IRA) or retirement account and set automatic monthly deposits into a roboadvisor.

Avoid Debt

Before even investing, make sure to pay off any high-interest debt like credit card debt or student loan debt. Their interest rates are higher than the rates of return you can expect from the market.

Depending on where you live, paying off student loans later could be a good idea, but I'd pay them off.

Maintain Good Credit Score

Your credit score is one of the things banks look at when lending you money.

You should aim to keep your credit score high because it will affect your ability to borrow money in the future.

You can improve your credit score by paying your bills on time and not maxing out your credit cards.

If you're trying to get a mortgage, you'll want a good credit score to qualify for the best rates possible.

The Takeaway

Your 20s are going to determine your future. Don't take them too lightly.

Yes, they are your learning years. You should still have a fun and social life. But developing bad financial habits will significantly set you back.

While you discover yourself and try new things, make sure to follow these long-term financial goals to develop the right attitude about money.

Unless you're already wealthy, money will always be an essential factor in your day-to-day life. Sure, it doesn't make you happy, but it can make you unhappy.

Do your financial future a favour and ensure that money will not become a problem down the line.

Action steps for your 20s

Whether you are in your early 20s or mid-way, here are some suggestions to help you determine your first step:

1) Start a budget

2) Pay off any high-interest debt (credit cards, student loans),

3) Cut as many costs as possible

4) Avoid lifestyle creep/inflation

5) Pay all your credit card bills on time - don't even miss one payment

6) Invest your money

7) Find and develop skills to increase your income

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