ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How to Manage Money in Your 20s: The Basics

Updated on January 13, 2018
Kaitlyn Lo profile image

Kaitlyn has a background in psychology and writes articles that teach you how to lean on your body, mind, heart, and those around you.

First, Don't Panic!

Understanding how to track your daily expenses and bills, manage your debts, and plan for retirement, all while building up your savings, is an important step towards a secure and successful adult life. If you’ve done a little Google searching yourself already, words like “loans,” “debt,” “credit score,” and “budget” can seem a little overwhelming. There’s a reason why there are financial consultants and professionals who dedicate years to learn everything there is to know about the world of money.

But, no need to panic! To manage your finances, there are just a few basic financial concepts and personal money management skills you need to understand to ensure a healthy financial future.

Let’s get started.

By Pixabay. CC0 Creative Commons.
By Pixabay. CC0 Creative Commons. | Source

How to Budget

Every penny overspent will make you a penny poorer. So the first thing you need to do to get a firm grip on your finances is to create a budget. Money experts recommend dividing each paycheck into three categories: essentials (rent, bills, food), priorities (debt payments, retirement savings, etc.), and luxuries (dining out, things you want but don’t need, etc.).

Here are a few strategies to help you budget effectively:

  • Prioritize your spending
    Determine the bare basics you need to live. If it doesn’t keep your stomach full, keep you warm, or maintain a roof over your head, cut it out. Then slowly add a few luxuries back in only if you can afford them. Don’t make the mistake of spending on things you don’t need before you take care of your necessities.

  • Go cash only
    Leave your cards at home if you need to. Allocate exactly enough cash you need for the month and spend only the cash you’ve made available for yourself. Physically pulling money from your wallet will make you more aware of how much you spent, and therefore much less likely to go over-budget.

  • Use apps to visualize your spending
    There are many mobile apps out there to help you keep an eye on your expenditure. Apps like Mint will keep track of where your money is going and will warn you when you’re approaching or have exceeded your budgets.

  • Find fun alternatives to socialize without spending
    Hanging out with your friends doesn’t always mean that you have to eat out at restaurants, bars, or clubs. Host a potluck dinner. Play some board games. Do a Netflix marathon. There are plenty of things you can do with your friends that don't involve money.


  • Be strict
    You are your worst enemy when it comes to budgeting, so you have to make that budget and stick to it! Even an extra coffee here and there can add up to hundreds of dollars at the end of the month.

  • Be flexible
    Like everything else in life, your finances are not always predictable. So, if you feel that your budget is just not working for you, it’s okay to reassess and adjust your budget to make sure you stay on track.

  • Be realistic
    If you just started working, don’t expect to be able to eat out every weekend and splurge on Friday night drinks with your friends. Be prepared to make compromises. The glamorous life can come later.

Poll: Food Budget

How much do you spend on food per week?

See results
By Pixabay, CC0 Creative Commons
By Pixabay, CC0 Creative Commons | Source

When Do You Need to Save?

It’s never too early to start saving. Whether it is saving for a rainy day or retirement, knowing you always have money in the bank can do wonders for your mental and financial health.

Here are a few strategies to maximize your savings:

  • Put something into your savings every paycheck
    Even if it’s just a few dollars, save a little from every paycheck. If you can put aside even $5 from each paycheck, and assuming you’re paid every two weeks, you’ll save $10 a month. In a year, you’ll be able to save $120, which is nothing to scoff at!

  • Save and forget
    “Extra” money is a very tempting thing, so it’s important to protect it - from yourself! When you put money aside, as long as it’s safe, just forget about it. Pretend it’s not there so you won’t feel the impulse to spend it.

  • Cut down your bills
    Too often, when we sign up for services, we set up a recurring payment plan and then forget about it. But you could be losing valuable savings on those monthly bills! Always look for newer, better deals on monthly bills like internet and mobile plans. Go through all the bills you’re paying at least every few months to make sure that you’re paying for only what you absolutely need. Are you paying too much for cable? Cancel it and sign up for Netflix instead.


Every penny counts, so don’t stress if you can’t manage to save as much as you would like. As long as you’re in the black at the end of every month, give yourself a pat on the back.

Poll: Save More

Do you think you can save more than you are now?

See results
By Pixabay, CC0 Creative Commons
By Pixabay, CC0 Creative Commons | Source

Start Handling Your Credit Wisely Now

How you handle your credit will determine your credit score, which will determine your financial standing with banks and other future investors. If you have a high credit score, you’re telling investors that you’re responsible, know how to handle your money, and are a trustworthy and safe investment.

Here’s what you need to do to start building a healthy credit score:

  • Choose the right card
    Whenever possible, always choose a credit card with no annual fee. If that’s not an option, there are often ways to avoid the annual fees (such as maintaining a minimum account balance), so make sure you do your research and understand exactly what you’re signing up for.

  • Limit to one-two cards only
    Don’t complicate your finances more than necessary. So only sign up for one or two cards. The fewer credit cards you own, the easier it is to keep track of how much money you owe.

  • Never max out credits cards
    If you consistently max out your credit cards, you could be flagged for irresponsible credit card usage. Banks and future loaners will see that as a sign that you’re either unable to pay off your debt or are not very good at managing your finances. If they don’t think you’re a trustworthy investment, you could have a hard time getting loans in the future.

  • Spend only what you can afford to pay off in full
    Just like you should never max out your credit limits, you should always pay off your balance owing in full. If you don’t have the money, don’t spend it! Simple as that. When future investors see that you’re able to pay off your credit card debt in full every month, they’re more likely to approve your future loan applications because they know they can trust you to pay them back.

By Nattanan23, Creative Commons CC0
By Nattanan23, Creative Commons CC0 | Source

How to Manage Your Debt and Loans

Not all debt is the same. Believe it or not, there is “good” debt just as there is “bad” debt.

"Good" Debt
"Bad" Debt
Has lower interest rates and is a good investment. Mortgages are considered “good” debt because the value of real estate will almost always continue to increase.
Has high interest rates and can often be avoided. Credit card debt is an example of “bad” debt because interest rates are often quite literally bank-breaking and most things you buy with a credit card can only depreciate over time.

Here are a few tips to manage your debt well:

  • Never take on more debt than necessary
    Know exactly what you can afford and never take on more debt if you don’t need to. If you’re in a situation where you do need to take out a loan, make sure you have a firm grasp of your financial situation and are 110% sure you can pay the debt back in a reasonable amount of time so you don’t have to pay more interest than necessary.

  • Pay off bad debt first
    Bad debt can make or break your financial health in a blink of an eye, so make sure you pay them off as quickly as possible.

  • Low interest is good
    When choosing a credit card, bank, and/or dealership, go through the fine print and make sure you’re getting the best deal. You don’t have to choose the first deal on the list. Take your time to shop around, and you’ll be saving yourself a lot of stress down the road.

  • Include debt payments into your budget
    There’s no point in saving money when you forget to make your debt payments. So remember, when calculating your budget, to include your debt payments and the amount of money you want to put into savings.

Don't Forget

If you’re not sure where to start, ask for help! You can work with consultants at your bank or creditors to help you come up with a debt payment plan so you can be sure that you start off on the right foot. And since you've read this far, you obviously recognize the importance of money management, so you can already give yourself a pat on the back!

© 2017 KV Lo


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)