How to Spend Money Right in Your 20s

Key takeaways

• Write down every spend for one month, then split your salary before you spend it: 50/30/20 on $300 is $150 for needs, $90 for wants and $60 for savings and debt (60/20/20 if needs cost more).
• Save for yourself first on payday, and build an emergency fund of 3–6 months of costs: with $240 a month in costs, that is $720 to $1,440.
• Check the yearly cost of a loan: $1,000 for a year costs about $88 at the 2024 average bank rate of 8.79%, but about $264 at an older advertised rate of 2.2% a month.
• When your salary rises, raise your saving first: a $2 coffee every day adds up to $720 a year, the same as a full year of saving 20% of $300.
• Your skills are your best investment in your 20s. Learn before you invest, and be careful with 'guaranteed high profit', pressure to hurry, or 'bring your friends'.