Budgeting Financial Planning Saving Money Finance Goals for Your 20s 7 Financial Goals and How To Achieve Them By Miriam Caldwell Miriam Caldwell Miriam Caldwell has been writing about budgeting and personal finance basics since 2005. She teaches writing as an online instructor with Brigham Young University-Idaho, and is also a teacher for public school students in Cary, North Carolina. learn about our editorial policies Updated on June 22, 2022 Reviewed by Margaret James Reviewed by Margaret James Twitter Peggy James is an expert in accounting, corporate finance, and personal finance. She is a certified public accountant who owns her own accounting firm, where she serves small businesses, nonprofits, solopreneurs, freelancers, and individuals. learn about our financial review board Fact checked by Emily Ernsberger Fact checked by Emily Ernsberger Twitter Emily Ernsberger is a fact-checker and award-winning former newspaper reporter with experience covering local government and court cases. She also served as an editor for a weekly print publication. Her stint as a legal assistant at a law firm equipped her to track down legal, policy and financial information. learn about our editorial policies Share Tweet Pin Email In This Article View All In This Article Build an Emergency Fund Make Your Down Payment a Goal Contribute to Your Retirement Get Out of Debt Start Investing Focus on Your Career Establish the Habit of Saving Money Frequently Asked Questions (FAQs) Photo: Geber86 / Getty Images In your 20s, you establish habits that will follow you throughout your life. This is the life stage when you might establish your career, get married, or even prepare to start a family, which makes it even more important to set goals for yourself and start saving. In short, if you adopt good financial habits in your 20s, you will be in a much better place financially in the future. There are seven main savings goals in particular that you should strive for in your 20s. Key Takeaways One of the first goals you should aim for in your 20s is building an emergency fund.Start saving for retirement, too—youth gives you an advantage when it comes to compounding returns.You can also start saving up for a down payment now, even if you don't plan to purchase a home for a while.Getting in the habit of saving and investing now will help you throughout the rest of your adult life. Build an Emergency Fund One of the most important financial tasks you can accomplish in your 20s is opening an emergency fund, which is a pool of money that you earmark for unplanned expenses. When unexpected life events occur, the fund acts as an insurance policy for your finances. For example, if you have a medical emergency, sudden job loss, or appliance breakdown, you can pay for it using money in your emergency fund. That way, you don't have to dip into your savings or go into debt. The amount you save in your 20s will be determined by the stability of your job, your income, any debts you may have, and whether you are a single- or double-income household. Your ultimate goal should be to save an emergency fund amounting to three to six months of living expenses. But when you first start budgeting, establish a conservative savings goal to allot at least 2% of every paycheck to your emergency fund for six months. Then, to build your emergency fund over time, increase that amount every year. Remember, your emergency fund should be fairly easy to access, so keep it in a liquid, low-risk investment vehicle, such as a savings account. Note Some experts recommend saving an emergency fund of three to six months of take-home pay rather than expenses. If you have the ability to save aggressively, this strategy can provide an even more bulletproof financial safety net in times of need. Make Your Down Payment a Savings Goal Another financial objective you should work toward is setting aside money for a down payment on your first home. The down payment is a portion of the purchase price that you pay upfront on a home at the time of closing. A down payment isn't an insignificant sum—it usually amounts to at least 20% of the purchase price. But the larger the down payment, the lower your mortgage payments can be, likely bringing you one step closer to affording the home of your dreams. Putting down a reasonable down payment can also avoid the need for private mortgage insurance, which you usually pay for in the form of a monthly premium that gets tacked on to your mortgage payment. Note For these reasons, it's useful to start saving for a down payment even if you don't plan to purchase your first home until your 30s or beyond. Depending on your job stability and whether or not you want to stay in the city where you are currently working, your 20s might not be the best time to purchase a home. No matter how far in the future a house purchase might seem, if you start saving early, you will be in a better position to buy a house when you are ready. Contribute to Your Retirement The key to having enough money to retire is to start putting aside money in a retirement account early in life and continue to do so regularly until you retire. Ideally, you should start saving for retirement as soon as you get your first job. In this case, compounding interest is your friend—the more you save in a savings or investment account when you're young, the more that money will grow, and the more you will have to enjoy in retirement. You may start by contributing up to your employer's match until you are out of debt. Then, shoot for annually contributing 15% of your income to a retirement account like a 401(k), traditional IRA, or Roth IRA every year. Note The annual limit on your own 401(k) contributions is $20,500 in 2022. To keep yourself on track with your retirement goals, reference retirement savings benchmarks. For example, one common retirement benchmark based on your age and income stipulates that you should have the equivalent of a year's worth of salary saved in your retirement fund at age 30. Get Out of Debt Although you may not be able to pay off your entire student loan balance by the time you are 30, you should take the steps needed to work toward that goal. You should also work toward paying off any credit card debt you have. When you manage your debt well and pay it off, doors can open for the other steps in your life, like owning a home or purchasing a new car. Take the time now to set up a debt payment plan so that you can get out of debt, or consider a debt reduction software program to help you become debt-free even sooner. Note If you have large student loan payments, look into the various repayment plans available that can help you save money on your monthly payment or even have some or all of your student loans forgiven. Start Investing If you want to build wealth outside of your retirement accounts, consider investing some money you would have otherwise put into a low-interest savings or money market account. As is the case for saving for retirement, compounding interest will help grow your invested money more quickly, and the sooner you start, the better off you'll be. You can choose to invest with the help of a financial adviser, who can recommend investment types and help you build an investment portfolio. If you understand the basics of the stock market, you may opt to open a taxable brokerage account with a reputable online brokerage firm and invest in stocks, bonds, mutual funds, or other securities. The key to successful investing is to diversify your portfolio. You can do this by holding a mix of assets (stocks, bonds, and cash, for example), spreading your money across different investments in various industries. While you should only invest money you're willing to lose, asset allocation and diversification can, together, minimize your risk and limit your potential losses. Before you implement these strategies, it's important to evaluate the risks associated with each type of investment. For example, stocks are generally the riskiest in the short term, so you might also want to move to more conservative investments like bonds or cash as you get older. Focus on Your Career Your 20s are a great time to establish a solid career. While deciding what career path to take, take the time to create a professional network and consider all the options available to you. Never be afraid to pivot, too. Just because you majored in business, for example, does not mean you can't pursue a career in communications. Note When applying for roles in your industry, look beyond the salary offer that's on the table. Consider the company's opportunities to invest in retirement, healthcare benefits, and general culture, too. Establish the Habit of Saving Money Another important goal to adopt in your 20s is spending less money every day. You don't necessarily have to deprive yourself to do so, either. You might set up a budget, start to shop at more affordable grocery and clothing stores, take advantage of coupons, and wait for items (or even gasoline at the local pump) to go on sale, for example. You can also look for ways to reduce larger recurring expenses so that you have more money in your pocket to put toward your savings and investing goals. For example, once you create a budget, you can cut or eliminate spending on budget-busters such as dining out or a seldom-used gym membership if you start to cook more at home or exercise outdoors. Embracing frugality will allow you to spend more on the things that are the most important to you now and will establish responsible financial behaviors that will serve you well beyond your 20s. Frequently Asked Questions (FAQs) What are the best investments to make in your 20s? When you're in your 20s, you benefit from a long time horizon for retirement. This allows you to invest more of your portfolio into aggressive, riskier investments because you'll have time to rebound from downturns along the way. A greater share of your investments can be in stocks and riskier funds. How much money should I save in my 20s? Most financial planners recommend saving three to six months' worth of salary in an emergency fund, as well as putting 15% of your monthly pay into a retirement fund. Building up to both of these is a good target for your 20s. What is a good net worth by age 30? It's generally recommended that you have an amount equal to one year of your salary saved in a retirement fund by age 30. This provides a good starting point for building your net worth over the following decades. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. SnoCope Credit Union. "The 3-6-9 Rules Guidelines for Emergency Savings." Consumer Financial Protection Bureau. "An Essential Guide to Building an Emergency Fund: What Is an Emergency Fund?" Fidelity. "How Much Should I Save for Retirement?" Internal Revenue Service. "IRS Announces 401(k) Limit Increases to $20,500." Fidelity. "How Much Do I Need to Retire?"