What Can You Do with Money in Your 20s?

Ankita Kamat

“What can you do with money in your 20s?” Do you have confusion about what to do with your money? Well, handling money is an art. Everyone must try to learn this art to grow financially.

For many of you being in your 20s means-enjoyment, fun, friends and party. But for me, this is the golden phase of my life. For me 20s means- opportunities, experiments, dreams, learning, financial independence and flying high. In most of the cases, our 20s decide our future. 

What ‘can’ you do with money in your 20s? Well, in the 20s one has choices between spending money and saving money. In my 20s I’m choosing saving money. Day-by-day I’m learning to be frugal. I’ve realised that being frugal helps me to get the life which I desire.

What can you do with money in your 20s?

One’s 20s are the period where one wants to explore everything in life. Such as career, dreams, travel, friends, enjoyment, party etc. But most of the time, while exploring various things in 20s, life pulls you off track when it comes to money. So it’s very important to observe the cash flow.

While exploring life in the 20s we all make money mistakes. And this is the time where we must learn from our money mistakes and grow. One can’t learn the art of handling money in one day. One must implement practical ways to grow financially.

What can you do with your money in your 20?

13 practical ideas to give right direction to your cash flow in your 20s

Do you think it’s very boring to observe your cash flow and thinking about saving? Well, trust me it’s not that much difficult and boring. I’m also in my early 20s and have started to look after my finance.

Let me elaborate on some aspects which helps you to implement simple steps to handle your money in your 20s-

1.Spend your money wisely in your 20s
2. Define your saving goals
3. Be aware of your cash flow in your 20s
4. Make money with money in your 20s
5. Avoid false assumptions/ beliefs related to money
6. First, clear your un-paid bills and debts
7. Avoid frequently purchasing low-quality products
8. Don’t plunk down your money on travelling in your 20s
9. Don’t spend money on eating outside food in your 20s
10. Do one-time investment on durable goods
11. Don’t give excuses in your 20s
12. Don’t lose your  money due to your ignorance in 20s
13. Learn to be frugal in your 20s

1. Spend your money wisely in your 20s

One of my friends is very found of shopping. She prefers shopping with her girl gang. If she gets advised by her friends to buy anything, without a second thought she buys it immediately.

Few days back when we met. She showed her new wristwatch which she bought while shopping with her friends. And she was complaining that the watch was not worth the price which she paid. As the price of a similar watch was 50% less on online stores.

Now it is your time to think, are you doing such over-spending mistakes?

How I’m spending my money wisely in my 20s?

What does it mean spending wisely? How to spend money wisely? Well, I share my experiences about how I spend wisely. While spending money I decide priorities. I make 2 lists in my mind. First one is ‘need’, a second one is ‘greed’.

First I would like to spend money on my ‘need’ list. Then when it comes to ‘greed’ I feel like if it is my greed then why should I buy this. So, mind gets clear about spending only on needs.

How I differentiate between need and greed? When you get the impulse to buy something wait for 15- 20 days. If you constantly feel it will be worth spending money on that thing for the next 20 days. Then you can buy it. All these simple steps help you to save and build your wealth in 20s.

And if you are going to spend a lot of money on the thing which you want to buy. Then you can write down plus points and minus points of spending money on it. If at all you get more plus points then you can spend money on it. This is the practical wise way to spend money wisely.

2. Define your saving goals

If you ask me, “what can you do with money in your 20s?” my first answer will be “save it”. Always pre-define your saving goals. I say again and again saving money is as important as earning money. You will be amazed at the end when you reach your financial goals by establishing saving habits in your 20s.

How I set saving goals in my 20s?

In my life, I got the opportunity to read good books related to finance management. Such as “Rich Dad Poor Dad”, “Think and Grow Rich”, “The Richest Man in Babylon”. So, before joining my job I realised the importance of saving money.

This is the reason I made monthly saving goals and achieved my monthly goals. My mind was very clear about how much money should I save.

3. Be aware of your cash flow in your 20s

How can you manage your money without being aware of your cash flow? It is not possible. So, you must know about your cash flow. Make a monthly budget, act according to your planned budget.

Create your own simple budget

In your 20s first, ask yourself about the awareness of your cash flow. Then you can find out the answer to “what can you do with money in your 20s”. I’m not saying you to take a pen and paper and write 50 pages about your budget! Keep it simple.

First list out your all months expenses which are inevitable. Then look after other expenses. Try to cut down the spending on unnecessary things. Give importance to savings. Always make smart moves with your money.

4. Make money with money in your 20s

Let your money make more money for you. Learn to earn passive income. Figure out ways such as stocks, mutual funds, business, real estate etc where you can invest money. Compound interest is the base for investment. If you start early you will earn more in up-coming years.

What I’m doing with my money in my 20s?

When I got my first job and started to get the salary I opened my mutual fund account. And I started to invest some part of my salary in a mutual fund. So I feel mutual fund is a good option for me to earn passive income.

But this depends on your risk-taking capacity. So if you are ready to take money risks then you can opt a mutual fund.

Share market is also one good source to make money. But personally, I’ve not invested practically in the share market yet. I’m still learning about it.

5. Avoid false assumptions/ beliefs related to money

In 20s everyone thinks it is very early to save for retirement. And Many people always feel they are not earning enough money to start saving. These are all baseless assumptions. Do not get trapped into such useless beliefs when it comes to money.

If you establish the habit of saving you can save a little bit of money every month. One must save some part of income irrespective of how much one earns. Start to plan for retirement in your 20s. This is the best thing what you can do with money in your 20s.

6. First, clear your un-paid bills and debts

Do not skip paying un-paid bills when you have money. If you procrastinate then you will end up by paying huge fines. Pay your monthly bills without delay.

Do not ignore your loans or debts. In the 20s you may have taken home loans or education loans. Try to get rid off your doubts by clearing your debts soon.

7. Avoid frequently purchasing low-quality products

Most of the time I talk about frugal living in my writings. But if you think that I am advising you about cheap living, let me correct you. Frugal living is not only about cheap living. It is all about cheap living without compromising the quality which helps to save more money.

Now again I would like to share my real-life example. My neighbour was given an old freezer from her friend for free. As that freezer was very old, it was not working properly.  And she spends a lot of money to get that freezer repaired. Few days it was working properly but again it get damaged frequently.

If you also buy low-quality products frequently, your money is flowing in the wrong direction. Do not commit such money mistakes.

8. Don’t plunk down your money on travelling in your 20s

I’m assuming all of you like travelling. In the 20s we feel like we should explore the whole world. But if you always travel and spend money you will not able to grow financially. Figure out ways to travel more with less money.

Recently I went for travelling. It was a family trip. My cousin was also travelling with us on that trip. He is fond of travelling and visited a lot of places. Because of him, we saved around 30% of our total travelling cost. He managed everything smoothly like room booking, reservation, food etc.

Pre-booking of rooms help you to save more money. So if you want to travel, take help from your friend or relative who has more knowledge about it. Spend your money wisely on travelling.

9. Don’t spend money on eating outside food in your 20s

If you have money it does not mean you should always visit a luxurious hotel and eat yummy food. If you spend more money on food now it’s time to avoid wasting money like this. Even teenagers have started to save money on food. So learn to be frugal.

During my college days, I was not carrying more cash. I was following a simple rule- ‘No cash, no spending’. So I was carrying a lunch box with me instead of eating outside food. Now also I avoid eating outside food. I prefer home-cooked meals.

10. Do one-time investment on durable goods

Are you buying cheap, low-quality goods frequently in your 20s? Have you saved a lot of money here? Now you want me to guide you what can you do with money in your 20s, right? But, you can not save money by spending frequently on cheap products.

It is very important to differentiate between being cheap and being frugal. To be frugal means living life economically without compromising on values. For example- if you are building a house, you should use good quality material. Otherwise, you will have to pay frequently a lot of money on repairs and maintenance. Here you are going to lose your money.

Instead of buying low-quality goods frequently, do one-time investment. Buy durable, good quality products. Understand the art of being frugal.

11. Don’t give excuses in your 20s

Do you think you are not earning enough money to start saving? Do you think 20s are very early to start saving? If you think like this then these are your false assumptions related to money.

It does not matter how much you earn. You can surely save some part of your income. Making false assumptions related to money is a mistake which will end up with bad results.

12. Don’t lose your money due to your ignorance in 20s

One must not lose money due to ignorance. In the 20s, most people behave impatiently when it comes to money. They either over-spend their money or they lose money by wrong investment.

If you invest more money in share market then it does not mean that tomorrow you will become a millionaire. One must not rush towards fake investment schemes. And one must not believe rumours related to share market or any other financial schemes.

13. Learn to be frugal in your 20s

Have you ever booked your flight/train without being aware of the destination? No? Then how can you be unaware of your cash flow?

My relative got distracted towards party, enjoyment and addictions. He is addicted to alcohol and gambling. He never thinks about his cash flow. He lost a lot of money due to his unawareness of cash flow. At the end of the month, he left with zero savings. He has a burden of debt in his life.

If you ask me about what can you do with money in your 20s to enjoy life? I suggest you can not afford to make such money mistakes. Which push you towards debt. So learn to be frugal.

Always think about frugality while thinking what can you do with money in your 20s. Take the right steps and give the right direction to your cash flow. This will boost your financial growth.

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.