20 Financial Tips for Young Adults

You will either learn to manage your money, or the lack of it will manage you.

Dave Ramsey

Financial literacy is the ability to make sound financial decisions. It's knowing the difference between good and bad debt, how to control your spending, how credit card debt can impact your credit score, and how saving money can help you reach your goals.

As you get older, you'll find that the world of personal finance is complex and often confusing. But as you go through your 20s, it's important to start learning the ins and outs of money management—and we're here to help!

We've put together 20 tips to help you manage your money and get on the right track toward financial freedom.

Here are 30 financial tips for young adults:

1. Save money in an emergency fund.

2. Make sure your credit score is good.

3. Be aware of car insurance costs and choose an appropriate level of coverage.

4. Make sure all student loans are paid off before making major purchases (or at least have an established plan for paying them off).

5. Don't buy something just because it’s "on-sale" or "cheap." It doesn't matter if you don't have the money for it.

6. If you're in debt, pay it off with the highest interest rate first—the sooner you get rid of that debt, the better!

7. Make a budget (and stick to it).

8. Start saving for retirement ASAP (and don't stop).

9. Consider investing in stocks, bonds, or mutual funds if you have extra cash lying around—but only if you understand what those things mean first!

10. Pay attention to what's happening in the news about the market and interest rates: They can affect how much money you make from any investments you've made so far!

11. Try not to waste money on things like eating out all the time or buying new clothes every couple of months; those things can add up fast! Instead, try cooking at home more often so that money goes further when it comes time to pay the bills.

12. Don't borrow money from friends or family members. You'll end up being in debt to them forever, and they'll feel like they have some ownership over you. Plus, it's just not cool!

13. Read (and reread) Dave Ramsey's book "The Total Money Makeover." This is an absolute must if you want to get out of debt and start saving up some cash.

14. Start budgeting now! Even if it's just $25 a week, setting aside a small amount will help you get used to living within your means and showing yourself that it's possible to save money every month—which is key if you want to go from broke college student to financially independent adult someday!

15. Open only one credit card at a time and always pay off the balance in full each month. If you open too many accounts at once, it can look bad on your credit history.

16. Open a savings account. This is one of the easiest ways to start saving money, and it's also one of the most important things you can do in your 20s (even though it seems like your priorities should be elsewhere). Having money saved up will help you deal with any financial hiccups that may come in the future.

17. Consider opening a Roth IRA or traditional IRA account with an investment firm or brokerage service like Fidelity or Schwab. You'll need to have earned income before you can contribute to an IRA (though if you're under age 59½, then there are certain exceptions), but once you've maxed out your contributions for the year (up to $6,000 annually) then these accounts are great for long-term growth potential because they allow for tax-free withdrawals once you reach retirement age.

18. Pay yourself first. Put at least 10% of your income toward savings and debt repayment each month, and you'll never have to worry about saving for emergencies.

19. Set up automatic transfers to your savings account so you don't even notice the money missing from your checking account.

20. Keep track of every dollar that comes into or goes out of your bank account on a spreadsheet or budgeting apps (like Mint), including what it was spent on (and why). This will help you monitor how much money is going where, so when an unexpected expense pops up, you won't be unprepared!

Key Takeaways

Financial literacy is important so that learners can make sound decisions about money, plan for the future, and avoid debt. It is extremely important for young people, who are often bombarded with messages from advertisers and marketers influencing their spending habits.

Managing the world of personal finance can be scary at the beginning. That’s why it’s important to develop good saving habits early in life and stick with them through adulthood. With the right skills and knowledge, you can get on track for long-term success and create the financial life you want.

Don't be afraid to ask for help! If someone offers you advice or resources they have, take them up on it!