How much Money Should I Save in my 20s?

Ankita Kamat

“How much money should I save in my 20s?” Is this question disturbing your 20s? Well, saving in one’s 20s will lead to financial freedom in one’s future.

I’m in my 20s and I’m planning about how much money should I save in my 20s. So I feel that in the 20s one should save money as much as needed to secure the financial future.

One’s savings depend on one’s financial goals in life. Well, I personally believe that the more you save, the early you achieve your financial goals.

How much money should I save in my 20s?

You should save more money in your 20s. You should save according to your monthly expenses. You must calculate your monthly expenses and roughly calculate how much money you want in your life.

Two factors are very important to consider before you start saving money. The first one is ‘purpose’ and the second one is ‘time’. Yes, first decide why do you want to save money and also decide in how much time period you want to save that particular amount.

How much money should I save in my 20s?

How much saving is considered as good in my 20s?

The financial goal must be defined with a time period. It will be easy for you to know how much money you should save. There are some common financial goals for which one should start to save money in one’s 20s. So learn to manage your money.

Let me elaborate the common financial goals to consider while saving in your 20s –

1.Saving money in 20s for higher studies
2. Starting one’s own venture or planning for self-employment in 20s
3. Building an emergency fund
4. Saving money for parents and family
5. Saving money in 20s to contribute retirement plans
6. Fulfilling wishes and desires

1. Saving money in 20s for higher studies

In early 20s education plays an important role. This will help you to get a good job and you can earn a good salary. To reach your future financial goals, generating good income is the base. This will end up saving more.

I have friends who are working & saving money for higher education. Even in my teenage, I had some friends who were doing a part-time job. If you want to save money in 20s to pursue higher studies, you must start to save in your early 20s. 

Real-life examples of saving money in 20s to opt for higher education

During my college days, my friend was doing a part-time job to save money. Everyday after college hours she used to invest her time on a part-time job. Then after graduation, she was working in a company, outside her hometown. She was getting a good salary. But she had to bear all the extra expenses such as room rent, food, travelling expenses etc.

She could not save more money for her higher education. So she switched her job. Now she is doing a job in her hometown. Now she is able to save more pennies for her higher education.

So, saving more money is as important as earning more. Look for a job where you can earn more as well as save more to contribute to studies.

Are you thinking to save money for higher education in your 20s?

1.     Start to save in your early 20s without delay.

2.     Find a job which helps you to save more money.

3.     To avoid extra expenses on food, room rent etc look for a job in your hometown.

4.     If you are still student & want to save for higher education look for any part-time job.

5.     If you are a student then join paid internships during your vacation. By this, you can start to save money in your early 20s.

2. Starting one’s own venture or planning for self-employment in 20s

Many people are interested in self-employment or want to start their own business. If you are one of them you must prepare a kickass strategy to save more in your 20s.

How much money I have saved in my early 20s?

To be honest, personally I am interested in self-employment and business. To be self-employed I needed initial investment. So, I started a small e-book business with zero investment. Earned some money and saved. But it was not enough. I asked myself the question “how much money should I save in my 20s to opt self-employment?”. And the answer was “2-3 months’ salary! If I do any job”.

This was the reason I had joined a job. And I was saving 70-80% of my monthly salary. My mind was very clear that I should save the maximum percent of my earnings. After working for 3 months I thought to continue my job. I continued my job a few more months. So that I can earn some more money and save.

Do you know how I have created my mindset to save more money? Well, as I like reading books I have come across the book, which is related to saving money. I have read the book “Rich Dad Poor Dad”, which is helping me to prioritise my savings goals.

Is this possible to save 70% of income in 20s?

You may wonder is this possible to save 70-80 percent of monthly income. Here I firmly say ‘yes’. Early 20s are the best time to save more money. In the early 20s, we do not have responsibilities like family, children etc. Even I am living with my parents. I do not need to spend money on basic needs such as food, clothing and shelter.

Believe me, early 20s are the golden period to save more. So do not miss this golden opportunity where you can save more. Decide how much money do you need to opt for self-employment. If you want to save money in 20s to start your own business. Calculate the rough amount and start to save.

I’ve come across other good books such as “Think and Grow Rich” and “The Richest Man in Babylon”. These are all good books which are helping me to manage my money.

Are you someone who wants to save money in 20s to fund your start-up?

1.     Calculate how much money do you want to start a particular business. If you feel that amount is huge. Start to save money in your 20s to start your business in 30s / 40s. This depends on the type of business.

2.     Try to save more percent of your regular income. At least try to save 60-70% of your regular income.

3.     Early 20s is the best time to save more. As you do not have huge responsibilities.

4.     Always do pre-calculation about how much money you want to save. Also, calculate duration.


3. Building an Emergency Fund/ Unexpected expenses

One must not ignore emergency fund while establishing a saving habit. Emergency funds are always useful in unexpected situations. Such as medical emergency, job loss etc.

“How much money should I save in my 20s as an emergency fund?” Is this question popped-up in your mind? Here I want to say, there is no hard and fast rule for this. If your family members also depend on you financially, you should keep more money aside as an emergency fund.

Keep aside 3-6 months expenses as savings in your 20s

I suggest that one must keep aside 3 months expenses. Even I saved around 3 months of expenses before leaving my job. Normally in case of job loss, it takes time to look for a new good job.

So, you must have saved emergency funds to bear your next 3 months expenses. But this also depends on the security/stability of your job and salary. If you have secured job where you will not be fired, you can save 2-3 months expenses. But if not, then you must be saved 6 months expenses as an emergency fund.

You can categorise your emergency funds while saving. For example- short term emergency fund and long term emergency fund. According to your financial situation decide some amount for short term and long term emergency funds.

Do you have confusion about building emergency funds in 20s?

1.     Even if you are in the 20s, you must keep aside some part of your income as an emergency fund.

2.     If you have a job loss threat, you must save at least 3 months expenses as an emergency fund.

3.     Categorise your emergency fund savings into 2 types. Such as short term and long term emergency fund.

4.     What if you can not save much money as an emergency fund? In this case, at least contribute 10 percent of your monthly income.

4. Saving money for parents and family

Usually, in the middle of 20s, we start to get financial responsibilities. It is the time one should save money for family members. So start saving money for your family.

In the 20s we should look after our parents and siblings. It’s a time to take financial responsibility on our shoulder. But no need to look at these responsibilities as a burden. This is an opportunity to learn about frugal living and to be better at handling finance. It’s time to save money wisely.

Factors which you should consider while saving money for your family

In teenage, we save money only for ourselves. But while planning savings for parents and siblings you must consider 3 important things. They are- education, health, marriage. I have seen my friends who are saving money and looking after their parents and siblings.

One of my friends is saving money and funding her sibling’s education. And my other friend contributed to her elder sister’s marriage. I am really proud of these 2 girls who have learnt to save money in 20s and sharing financial responsibilities.

How much money should you save in your 20s for your family?

1.     This depends on various factors such as number of family members, their health condition etc

2.     While saving for parents and siblings consider 3 factors-education, health and marriage.

3.     For the benefit of family take insurance policies like life insurance, health insurance, health insurance coverage for pregnancy.

5. Saving money in 20s to contribute retirement plans

“How much money should I save in my 20s for retirement?” Do you think it is very early to think about retirement? Well, if you start to save more in your 20s you can opt early retirement.

I have heard real-life stories of some people, who retired in their 30s or 40s. But even if you retire in your 50s or 60s you must have saved your money wisely. You must have the ability to bear all your expresses in the rest of your life. So from now onwards make smart moves with your money.

If you are thinking about how much money you should save for retirement. This depends on your monthly expenses and monthly income. Here I feel that one must take calculated risks in 20s to save more and retire early.

Take calculated risk and save more money in your early 20s

Here I am talking about calculated risks like investing in mutual funds. We can consider a mutual fund as a passive income stream to earn money. Mutual funds have a lesser risk than share/stocks. It is not about how much you save money. But you must also know how to save more by investing wisely.

In my 20s now I have invested in mutual funds. This is a calculated risk which I have taken. The minimum amount to invest in a mutual fund is 100 INR (SIP). Mutual fund is all about compound interest. So one can save and grow more money here.

My personal opinion is one must save ‘X’ amount before retirement. And this ‘X’ amount must provide sufficient interest per month. To cover all monthly expenses after retirement.

Are you thinking to this is unnecessary to plan retirement saving in 20s?

1.     If you save more in the 20s, you will get the opportunity to get voluntary retirement early.

2.     Take calculated risk in your 20s to save more money.

3.     You must save money which can bear all monthly expenses.

4.     Be aware of good financial schemes like mutual funds.

6. Fulfilling wishes and desires

We all have dreams or wishes which can be fulfilled by money. For example- world tour, big house, vehicle etc. After deciding your saving priorities one can focus on these wishes.

Now you may think how much money one should save to fulfil wishes. Well, banks provide some schemes for specific dreams. I have come to know about such schemes. Here one can decide one’s wish and start to save. The minimum amount for this scheme is 50 INR. Save money to fulfil your wish.

My cousin is fond of travelling. He saves money and travel often. Do you have any such wish or dream which can be fulfilled by money? Well, you can comment your wish in the comment box below. Together we will try to figure out ways to save money to accomplish your dreams.

Always think from a broader perspective while thinking about- how much money should I save in my 20s. Prioritise your saving goals. Implement practical ways and start to save money in your 20s.

Ankita Kamat

I'm Ankita Kamat, the creator of Frugal Beat, a blog dedicated to frugal living. Join me in exploring practical ways to save money, reduce waste and live a purposeful life. Let's embrace frugality as a lifestyle together.