Best Money Moves - Every Generation

Our 12-Step Smart Money Guide for Your 20s


Ask anyone over the age of 50 what advice they would give their younger self about money, and most say “start saving earlier and keep on saving”.  That may be some of the best advice in all of the financial services industry, because little else can match the time value of money.  If you’re in or about to enter your 20s, we share the following guide to help you establish smart money habits that will serve you for a lifetime.

The Lenox 12-Step Smart Money Guide for Your 20s

  1. Look at a chart illustrating the time value of money (TVM).

    If a picture is worth a thousand words, this is the picture you don’t want to miss.  The time value of money is based on the idea that money in hand today is worth more than the same amount in the future due to its potential earning capacity. Provided money is saved and earns interest over time, any amount of money is worth more the sooner it is received (and stashed away).  See for yourself.  Go online to and see how saving even a small amount of money each month in your 20s will pay off royally for you in your 50s, 60s and beyond.  It’s extremely difficult to have your money work as hard for you later in life with such a small investment on your part.

  2. Learn the difference between wants and needs.

    You want a new wardrobe, but your car needs new tires. You want to go on that trip, but you need to pay your rent. Learning the difference between wants and needs can be one of the most painful yet powerful lessons in your 20s. It’s a sure step into adulthood when you realize you can’t have or do everything you’d like, at least not at the moment you’d like to do so.

  3. Create a budget.

    This is easier than you think, and it can be more comforting than constraining.  Make a list of your monthly “needs” –– rent/mortgage and other housing fees or expenses, food (grocery and eating out), auto expenses (payment, gas, maintenance), medical expenses (insurance, prescriptions, etc.), work expenses (parking, lunches), personal care (haircuts, hair salon treatments), savings, and anything else that is a repeated cost.  Based on your income, map out your budget so that your needs list is covered first and foremost.  If the numbers aren’t working out, adjust accordingly.  Next, make a list of your “wants” –– wardrobe updates, entertainment, health clubs, travel, furnishings, gifts, etc.  Getting to spend money on your wants will require you stay true to your needs budget, which can be a great motivator.

  4. Discipline yourself.

    You’re in charge of your future, so it’s on your shoulders not just to create a budget but to stick to it. It’s easy to justify spending money you shouldn’t.  Everyone does it.  But, if it causes you to run up credit card debt or to take out costly loans, the only one who suffers is you.  TIP:  If you feel you really must have something, put the item on hold for 24-48 hours before purchasing it, giving yourself time to think through the ramifications to your budget and future savings.  You may find that the piece of new furniture you were eyeing isn’t nearly as important as the peace of mind in knowing you can cover your condo fees for the next quarter.

  5. Build an emergency fund.

    Think of an emergency fund as your safety net.  If you lose your job tomorrow, or become ill or face some other situation that demands cash quickly, how long before you run out of money?   The answer to that question is daunting for most 20-somethings.  The goal is to save enough money for three to six months’ worth of living expenses.  If that means getting a part-time job in addition to your main job, it’s not a bad sacrifice to make for the short term.

  6. Get rid of costly credit card debt and student loan debt.

    It’s no secret that credit card debt is perhaps the costliest of all debts.  If all you’re doing each month is paying off the interest and never tackling the principal, you need to address this issue immediately.  Whether it means cutting other expenses, getting credit counseling, taking on a second job, or asking family for help, do what it takes to get out of what can be a financially crippling situation.  With your credit card debt under control, work to get rid of your student loan debt.  Again, do what it takes to speed up student loan repayment thereby reducing your overall loan cost.

  7. Get health insurance.

    Understandably, few people in their 20s feel the need to pay hundreds of dollars a month for health insurance premiums when they rarely if ever get sick.  However, should you get hurt or are hospitalized, you may be faced with bills that run in the thousands of dollars.  For this reason, it’s a smart money move to at least look into a policy that provides catastrophic health care coverage.

  8. Create a will.

    Even if you’re not married or don’t have children, having a will ensures that in the event of your death whatever you do have gets passed along to the person or persons of your choice.  It’s easy and affordable to create a simple will online.

  9. Organize your finances and important paperwork.

    Being in control in life always feels good and can be very comforting.  Having your financial documents, insurance policies, service contracts, rent and lease agreements, and other important paperwork organized and at hand can provide that same sense of calm.

  10. Improve your skill sets to improve your compensation.

    Do you feel that you’re ready to buy a house, get a better car or take that dream vacation, but your income doesn’t allow for these financial commitments?  It might be time to take steps to move up in your current career or move on to a new career.  It can be a healthy sign when your aspirations in life are bigger than your income.  What better time to improve your skill sets, research new careers, seek career counseling and otherwise improve your marketplace value.

  11. Tackle stress and boredom in financially healthy ways.

    Find smart money ways to spend your free time and to relieve stress and boredom.  Retail therapy can feel wonderful in the moment but terrible when the statement arrives.  Reservations at that gourmet restaurant sound impressive until the tab sets you back a car payment.  The ski trip with friends was a fun thing to do on an otherwise dull weekend but that was a month ago and seeing the tally on this month’s credit card bill isn’t fun at all.  While your 20s is typically a decade of cutting back or doing without at times, the trade-offs you make now will feel fabulous later on.  Make exercising your hobby, not shopping.  Find the best offbeat, low cost restaurants in town and enjoy the variety of cuisine.  Treat yourself to an afternoon at the local spa rather than a weekend on the ski slopes.

  12. Relax in knowing you’re ahead of the game.

    Your 20s can be such an exciting time –– your first step into adulthood, self-sufficiency, a career, and relationships and decisions that will shape your future.  That’s why it’s so important that you get this time of your life “right”, and that you start now while you have time on your side to shape good financial habits for a lifetime of financial comfort and security.  Any of the tips from this guide that you follow in your 20s will put you way ahead of the game.


At Lenox, we have a special affinity for helping young people get on and stay on track, guiding them through the smart money moves in their 20s that will serve them well for decades thereafter.  We align life planning, career planning and personal financial planning to help you attain what matters most to you. It’s one more way we help you FUND A LIFE YOU LOVE™.

If you’re ready to discuss financial, career and life planning that will allow you to Fund a Life You Love®, we’d love to tell you more.  Let’s talk.  It’s your tomorrow. Call us for a complimentary 1 hour review.  Call 513.618.7080 or visit to Fund a Life You Love.

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This blog is limited to the dissemination of general information pertaining to its investment advisory/management services. This is not intended to be personalized investment advice. Please contact a Lenox adviser if you would like additional information.