How to Save Money in Your 20s: 15 Smart Money Moves for Young Professionals

If you’re in your 20s like me, you probably know how exciting and challenging this phase of life can be. We’re navigating our first real jobs, setting out on our own, and making decisions that will shape our futures. One of the most crucial decisions we make during this time is how we manage our finances. So, grab a cup of your favorite budget-friendly home-brewed coffee, and let’s talk about how to save money in your 20s while living life to the fullest.

Live Beneath Your Means

Living beneath your means isn’t about sacrificing your quality of life; it’s about making choices that allow you to save money and build a secure financial future for years to come. Here are a few ways you can do it:

• Housing Choices: While you might be able to afford a more spacious apartment or a luxury rental, consider opting for a smaller, more budget-friendly space. By choosing a one-bedroom apartment instead of a two-bedroom one, you can save significantly on rent while still enjoying a comfortable living situation that is big enough for all your needs.
• Dining Out Mindfully: Instead of dining at fancy restaurants every weekend, make dining out a special occasion rather than the norm. Preparing meals at home or opting for more budget-friendly eateries can save you a substantial amount over time.
• Wardrobe Selection: Instead of frequently buying new, trendy clothing, focus on building a versatile, quality wardrobe that lasts longer. You can mix and match key pieces to create various outfits while avoiding the expense of always chasing the latest fashion trends.
• Entertainment Choices: Find budget-friendly or free entertainment options in your area, such as visiting parks, attending community events, or exploring local attractions. Limit extravagant entertainment expenses to special occasions.

Living beneath your means doesn’t mean depriving yourself of experiences but rather making conscious choices about what is important to you. The above are just suggestions on areas to look into, allowing you to learn how to save money in your 20s without sacrificing your overall quality of life. It’s about finding a balance between enjoying the present and securing your financial future.

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Distinguishing Between Needs and Wants

Learning to differentiate between needs and wants is a vital skill for anyone looking to learn how to save money in their 20s. Needs are the essentials for survival and well-being, while wants are the extras that make life enjoyable but aren’t absolutely necessary.

• Needs: These include food, shelter, clothing, transportation, and healthcare. It’s crucial to ensure that you’re covering your needs comfortably before indulging in wants. You can include skincare, haircare, and other items you use on a daily basis here as well.
• Wants: Wants are the things you desire but can live without. This can be a night out with friends, the latest smartphone, or designer clothes. However, this also includes buying new products you don’t necessarily need or just buying items because they are popular. It’s important to allocate a portion of your budget for wants, but don’t let them overshadow your financial goals.

We can be very tempted to live up to the societal norms in the area that we are living in, whether it means owning a new designer bag or trendy outfits. Even the people we surround ourselves with have an influence on what we tend to buy in order to fit in. But, it is important to remember what you value and whether or not these purchases will bring you joy and happiness, or just the feeling you belong. Looking into your purchase history is a great way to start seeing where you can save money because we don’t need yet another pair of jeans.

I like to go about these shopping purchases based on what I already own. If I think I will keep it for more than a few seasons, I might purchase the item. Everything should have a use in your house rather than just sitting there. When it comes to items such as makeup, skincare, or haircare, I wait till I need more of that type of item before purchasing. This helps reduce waste, save money, and ensure that I have a product that I am excited to try out. You don’t need to try 10 serums all at one time, so just pick and choose.

Waiting for Deals

Patience is a virtue, especially when it comes to shopping. Before making any non-essential purchase, consider waiting for deals, discounts, or sales. There are several strategies you can use to score the best deals:

• Couponing: Keep an eye out for coupons and promo codes. Many websites and apps offer discounts on a wide range of products and services. Especially going into the holiday season, you can easily save hundreds of dollars with the promotions that happen.
• Price Comparison: Use price comparison tools to find the best deal on items you plan to purchase. Sometimes, a little research can lead to significant savings. I love using sites like Honey to see if I am getting the best deal or if the discount is a standard one.
• Off-Season Shopping: Buy seasonal items like clothing, sporting goods, or holiday decorations during off-season sales when prices are significantly reduced. I personally love shopping in the clearance categories of my favorite brands like A&F to score major discounts on items that I wanted to buy.

I keep a list of the items I am looking for, whether it is something generic like a brown purse or a specific skincare item, and wait to see if any deals come up before I really need it. If a good sale comes beforehand, I’ll look into buying it, and if it does not, I would have spent the money anyway. This is a good way to keep track of what you want while also saving money.

Avoiding Fashion Trends

Fashion trends can be tempting, but they can also be a drain on your finances. It’s important to remember that fashion is cyclical, and trends come and go. Instead of constantly buying new clothes to keep up with the latest styles, consider these alternatives:

• Timeless Wardrobe: Invest in classic pieces that never go out of style. A few well-chosen, high-quality items can go a long way. I personally like to stick to a mostly neutral color palette so I know my pieces all go together and will stand the test of time.
• Thrifting: Thrift stores and online resale platforms are great for finding stylish clothing at a fraction of the price, especially if you do want a trendy piece. Second-hand doesn’t mean second-rate! Thred-Up is a great online platform with great discounts on a variety of fashion items.
• Swap with Friends: Organize clothing swaps with your friends to refresh your wardrobe without spending a dime. This can be an easy and fun way to try new styles and looks without breaking the bank.

Buy Generic Brands and Store Brands

When you’re shopping for groceries or household items, consider choosing generic or store brands over name brands. These products are often more affordable without compromising quality since a lot of branding is actually a marketing tactic. Here’s how it can help you save money:

• Price Comparison: Compare the prices of generic and name-brand products. In many cases, you’ll find that the generic options are significantly cheaper for similar quality. Most of the time, the generic brand works just as well.
• Quality Evaluation: Sometimes, the quality of generic products is on par with, or even better than, name brands. Start with small purchases to evaluate the quality, and gradually transition to generic options if they meet your standards.
• Cost Savings: Over time, consistently choosing generic brands for everyday items like food, cleaning supplies, and toiletries can lead to substantial savings on your monthly bills.

By opting for generic and store brands, you can reduce your monthly expenses without sacrificing the quality of the products you use, making it a valuable addition to your money-saving strategies.

Minimizing Food Waste

Food is one of the major expenses in our lives, and it’s easy to let it go to waste. To save money and help the environment, make an effort to minimize food waste:

• Meal Planning: Plan your meals and create a shopping list to avoid buying more than you need. This not only helps you have a plan of action at the grocery store, it also helps you stick to a budget and stops you from eating out since there are no unplanned meals.
• Use Leftovers: Get creative with leftovers by turning them into new meals. For example, last night’s chicken can become tomorrow’s chicken salad.
• Freeze Extras: If you have extra food that you can’t consume immediately, freeze it for later use. This prevents food from spoiling and saves you from ordering takeout. I personally do this with a ton of groceries items such as ginger and jalapeno which I know I will need from time to time for condiments and other meals.

Embracing Alternative Transportation

Transportation expenses can add up quickly, but there are ways to save on your commute:

• Public Transportation: If possible, use public transportation. It’s often more cost-effective than owning a car, and it’s better for the environment. This is an especially great option for those who live in a major city and can get around easily.
• Carpooling: Share rides with friends or colleagues to split the cost of gas and parking. Ask around if anyone is taking a trip to the office or grocery store and offer to split any shared costs. People are often more than happy to help out.
• Walking and Biking: If you live close to work or other destinations, consider walking or biking. It’s not only cost-effective but also a great way to stay active. Since I live about half a mile from a grocery store, I will try to walk there whenever I can.
• Ubering: If you live in a big city or don’t need a car often, consider using Uber whenever you do need to occasionally get around. It can definitely be cheaper than owning a car and paying for gas, especially with insurance and parking fees.

Limiting Eating Out and Coffee Runs

Eating out at restaurants and grabbing coffee on the go can be a significant drain on your finances. While it’s perfectly fine to enjoy these treats occasionally, making them a daily habit can eat into your savings. Here are some strategies to cut back:

• Meal Prep: Prepare your meals at home and bring them to work. Not only is it cost-effective, but it’s also healthier. Use reusable containers and lunch bags for even more savings.
• Coffee at Home: Invest in a good coffee maker and brew your coffee at home. This simple change can save you a considerable amount over time. I personally just use a simple French press and kettle each morning for my coffee fix and spent less than $75 on the equipment. With a bag of coffee averaging about $10, you can easily save hundreds by just making coffee at home.
• Limit Dining Out: Set a budget for dining out and stick to it. Choose restaurants that offer good value for your money or make it an occasion when you go out to restaurants. Living in a bigger city, I have a lot of places I want to try out. To save money, but also have these experiences, I eat out once a week or less. I do this with friends and try to pick a new place each time. Not only am I connecting with people, but I am making it a fun experience as well.

Reevaluating Subscriptions

In today’s digital age, it’s easy to accumulate various subscriptions for streaming services, magazines, gym memberships, online courses, and more. While these can enhance your life, they can also deplete your bank account. To save money, periodically review your subscriptions and determine if they’re all necessary.

• Cut Unneeded Subscriptions: Cancel subscriptions you no longer use or need. For example, if you’re not using that gym membership, it’s time to say goodbye. If you have a gym in your apartment building, you might not have needed a gym membership in the first place.
• Bundle Services: Look for bundle options that offer several services at a reduced cost. For example, bundle your internet and cable for a discount.
• Share with Friends: If you and a friend both enjoy a streaming service, consider sharing the cost of a family plan. It’s a win-win for your wallets.

Reduce Energy Consumption

Energy bills, whether for electricity, gas, or water, can be a substantial monthly expense. Fortunately, there are steps you can take to reduce your energy consumption and save money. Here are some energy-saving tips:

• Energy-Efficient Appliances: When it’s time to replace appliances, consider investing in energy-efficient models. These appliances use less electricity and water, which can lead to noticeable savings over time.
• Unplug and Turn Off: Get into the habit of turning off lights, appliances, and electronics when they’re not in use. Even in standby mode, many devices consume energy. Using power strips can help you easily cut power to multiple devices at once.
• Fix Leaks: Dripping faucets, running toilets, and other water leaks can waste a significant amount of water and money. Fix these issues promptly to save on your water bill.
• Programmable Thermostats: Install a programmable thermostat to regulate your home’s temperature. This can help you optimize heating and cooling, reducing your energy expenses.

By reducing your energy consumption, you not only save money but also contribute to a more sustainable future.

Cashback and Rewards Programs

Make your spending work for you by taking advantage of cashback and rewards programs. These programs are offered by credit cards and various shopping apps, and they can help you earn money or discounts on your purchases. Here’s how to maximize this money-saving opportunity:

• Choose the Right Credit Card: Select a credit card that offers cashback or rewards on your regular spending categories, such as groceries, dining, or travel. Some cards offer a flat rate on all purchases.
• Use Shopping Apps: Many shopping apps and websites offer cashback or rewards for making purchases through their platforms. Before you make an online purchase, check if the store is affiliated with a cashback or rewards program. I love using Honey, Capital One Shopping, and Rakuten to find the best deals.
• Read the Fine Print: Familiarize yourself with the terms and conditions of the program. Be aware of any restrictions, such as minimum spending requirements, return fees, shipping costs, expiration dates, or limits on rewards.

By actively participating in cashback and rewards programs, you can essentially receive a discount on your everyday expenses, which can add up to significant savings over time.

Limit Alcohol and Entertainment Expenses

While it’s important to enjoy your social life and leisure activities, frequent nights out and entertainment expenses can quickly eat into your budget. By making a few adjustments, you can continue to have fun while saving money:

• Host Gatherings at Home: Instead of meeting friends at expensive bars or restaurants, consider hosting gatherings at home. This way, you can enjoy good company and save money on pricey drinks and meals.
• Attend Free or Low-Cost Events: Many cities offer free or low-cost events, such as concerts, art exhibitions, or outdoor movie screenings. Keep an eye on local event listings to find budget-friendly entertainment options.
• Set Entertainment Budget: Establish a monthly budget for entertainment expenses. This budget can cover dining out, movie nights, and other leisure activities. Sticking to a budget ensures that you’re in control of your spending. Of course, buy the concert tickets you have been incredibly excited about, but also pick and choose what is worth your hard earned money.

By finding cost-effective ways to socialize and entertain yourself, you can maintain a fulfilling lifestyle without overspending.

Sell Unused Items

Your home may be hiding potential money in the form of items you no longer need or use. By selling these unused possessions, you can declutter your living space and earn extra cash. Here’s how to go about it:

• Declutter Room by Room: Begin by going through your home room by room and identifying items you no longer need. This could include clothing, electronics, furniture, or collectibles.
• Determine Value: Research the value of these items to get a sense of their worth in the market. Websites like eBay and online marketplaces can be excellent resources for this.
• Choose the Right Selling Platform: Depending on the type of items you’re selling, consider using various platforms. For electronics, you might prefer eBay or Craigslist. For clothing, platforms like Poshmark can be a good option. I personally love using Thred-Up or Plato’s Closet for clothes and Facebook Marketplace for virtually anything else.
• Take High-Quality Photos: When listing your items, take clear, high-quality photos and write accurate descriptions. This will attract more potential buyers and result in higher selling prices.

Selling unused items is not only a great way to make extra money but also to simplify your life by reducing clutter. The extra cash you earn can be directed toward savings or other financial goals.

Invest in Reusable and Sustainable Products

Making a conscious effort to switch to reusable and sustainable products can not only benefit the environment but also save you money over time. Here’s how to incorporate this tip into your lifestyle:

{Related Post: 10 Easy Swaps for a More Eco Friendly and Zero Waste Lifestyle}

• Reusable Shopping Bags: Instead of using disposable plastic bags when shopping, invest in durable, reusable cloth shopping bags. Many stores offer discounts when you bring your own bags, and you’ll avoid the cost of purchasing disposable ones.
• Water Bottles and Travel Mugs: Purchase a reusable water bottle and travel mug for your daily hydration and caffeine needs. This eliminates the need for single-use plastic bottles and paper cups, saving you money on buying beverages while reducing waste.
• Cloth Napkins and Handkerchiefs: Rather than buying paper napkins and tissues, invest in cloth napkins and handkerchiefs. They can be washed and reused, reducing your recurring expenses on disposable paper products. It is a huge cost saver when it comes to something as simple as paper towels or cotton rounds.
• Reusable Food Containers: Opt for reusable food containers made of glass or stainless steel for storing and transporting meals. They are more durable and sustainable than disposable plastic containers and can save you money over time.

By making these sustainable and cost-effective choices, you’ll not only reduce your environmental footprint but also enjoy long-term savings on disposable products and packaging.

Bonus Tip: Investing Your Savings

By following these tips, you will have managed to save a significant amount of money each month. Now, it’s time to think about what to do with those savings to secure your financial future. Here are two ways to consider investing your hard-earned money:

1. Invest in Yourself: Use some of your savings to invest in yourself. This could mean pursuing additional education or certifications to enhance your skills, trying out a side hustle, or taking courses such as Udemy, Coursera, and Masterclass. By gaining new qualifications, you may become more valuable to employers and potentially earn a higher income in the long run. Your side hustles or entrepreneurial ventures can also generate additional income streams.
2. Invest in the Stock Market and Retirement Funds: To grow your wealth, consider investing in the stock market and retirement accounts. This is a smart long-term strategy. Here’s how to get started:
   • Retirement Accounts: Contribute regularly to retirement accounts like a 401(k) or an Individual Retirement Account (IRA). These accounts offer tax advantages and compound your savings over time.
   • Stock Market: Invest in a diversified portfolio of stocks and bonds through index funds or exchange-traded funds (ETFs). Diversification reduces risk and increases your chances of earning a reasonable return on your investments.

{Related Post: 7 Steps to Financial Freedom: Financial Planning as a Young Professional in Your 20s}

Conclusion

Learning how to save money in your 20s as a young professional might not always be easy, but it’s incredibly rewarding. By living below your means, distinguishing between needs and wants, waiting for deals, avoiding impulsive fashion trends, minimizing food waste, embracing alternative transportation, cutting back on eating, and reevaluating your subscriptions, you’re taking significant steps towards financial security.

Remember that building a strong financial foundation is a journey, and it requires discipline, patience, and determination. You don’t have to do everything all at once, but these areas in your life are a great place to start. We live in a high consumerist society, so just take the time to understand what you actually need in life.

The money you save today can be a powerful tool for creating the life you want in the future. Whether you choose to invest in yourself or in the stock market and retirement funds, the decisions you make now will have a lasting impact on your financial well-being.

So, embrace these money-saving tips and take control of your financial future. Your future self will thank you for the smart financial decisions you’re making today.

Note: This blog post provides general financial advice and tips based on my own experiences. It’s essential to consult with a financial advisor or expert to tailor your financial plan to your specific needs and goals.

With love,
Aditi <3
Aditi Rani – Figuring Out Life in Your Twenties

*Disclaimer: This is not professional advice. Some links are affiliate. By clicking and/or purchasing, I may receive a commission. It does not alter the price or change your buyer experience.