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The best way to save money during your 20s

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There is a ton of information out there on the internet on how to save money in your 20s. Every other person has some other advice on this often ignored subject. From suggesting complicated strategies and excel models to simply recommending saving money in fixed instruments is floating on the internet. 

All of this is good, but often the problem is that many young graduates are not financially savvy. They have not been educated adequately on financial matters from their childhood; hence, these things don’t come naturally to them. With less knowledge and experience, they often find it difficult to take the right steps to save money. Most of them either take advice from financial advisors or consultants, but some completely ignore it thinking that finances will somehow take care of themselves. 

Truth be told that saving money is not as simple as it is projected sometimes nor it is as complicated as some people make it to be. What is needed is a simple and easy approach to begin saving money early in your career.

Through this article, we aim to show some simple and effective steps that you can take in your 20s. Here they go:

  1. Get a good-paying job and/or business

 No money, no savings. This is the harsh truth but inescapable. Focus on strengthening your career so that your pay increases at a good pace.

2. Create a budget and most importantly follow it

Make realistic goals of savings vs. expenses. Experts recommend saving at least 20% of your income, but there is no fixed number. We have seen that most people overcomplicate this budget-tracking process. As a result, they get frustrated after a while and leave this process. Our recommendation is to keep it simple. Make some approximations and stick to them. 

3. Build a cushion (Emergency Fund)

Park 6 months of your income in an FD (fixed deposit) or debt funds as a cushion for an emergency. Do not use these funds for regular purchases. This money is only for surviving in the bad times.

4. Pay off debt

Needless to say that a free bird is a happy bird. Pay off your debt as early as possible because this will not only give you financial freedom but also mental freedom.

5. Think long-term

  1. Invest in mutual funds, index funds, or ETFs – Start saving 15-20% of your monthly salary in these instruments. If you have knowledge of selecting the right fund, go for direct funds or else consult a mutual fund advisor. Again, keep it simple with 3-4 funds in total spread across large-cap, mid-cap, and small-cap. You can also consider Flexi-cap funds.
  1. If you are financially savvy, start investing in shares directly in-parallel to passive investing (MF, Index funds, etc.). This will help you compound your capital even further.

Bottom Line

Between the hustle-bustle of your career, family, and multiple other priorities, you should pay attention to saving money starting in your 20s. Do not wait until you are 35. That is a trap. It will not let you be financially free till your 50s. 

So, the bottom line is to get started. And right now. Start saving now through these little steps, and we are sure you will learn many more advanced things yourself on this journey of financial prudence.

Vikram Ranjan
Vikram Ranjan

Vikram Ranjan is your typical neighborhood guy, who did engineering followed by MBA, and then started working in an IT company. Yeah, he knows how this sounds. But by God’s grace, he found his calling in writing and stock markets in particular. So, in his free time (It’s almost negligible. Yes, I am serious.), he has started writing on finance and stock markets. When not writing, he works on developing discretionary trading strategies.


Varun is a stock market enthusiast and passionate writer. He has 2+ years of experience in writing about stock market and personal finance.