For all the craziness in the world at the moment, these are good times to be in your 20s. It means you’re out of high school, past whatever post-secondary education or training you chose, and – hopefully – gainfully employed. You’re statistically healthier than most other age groups and avoided the learning curve of the generation before you, who had to adjust to the realities of the internet, social media, and an ever-changing job market. You probably have a favorite local coffee shop or cafe, and you have access to almost every movie, series, song, or album ever created – either for free or for a very reasonable cost.

You also have an amazing opportunity to prepare for the future in a meaningful way without drastic sacrifices. You can avoid the common mistakes many before you have made, as well as laying the groundwork for healthy, enjoyable golden years. Given that many of you may live to be 100 or more, that’s even more important now than it was a generation or two ago.

Let’s talk about why it’s important to do this, instead of simply pushing forward and hoping it will work itself out in the end.

Having Dreams vs. Setting Goals

We’re big on “living your dreams” in American culture. We talk about it a great deal as if most people can be extraordinary if they only believe and have the right inspirational music swelling behind them. And there’s no end to the motivational slogans, often on posters of silhouettes climbing mountains, sun bursting through the clouds, or athletes doing super-athletic-ish stuff:

“If wishes were horses, then dreamers would ride.”
“Shoot for the stars; even if you fall short, you’ll land among the clouds.”
“Dream as if you’ll live forever; live as if you’ll die today.”

There are about a thousand more. And hey, I’m all for inspiration and motivation. I just don’t find these particular outbursts of shiny pablum particularly useful. The first one doesn’t actually mean anything – it just sounds nice. The second is dangerous – if you “shoot for the stars” and miss, you’ll plummet to your death from a very high altitude. And the third is worst of them all, because it’s tangible and doable and dangerously wrong, particularly if you’re starting to put together financial goals for your 20s.

If you “dream as if you’ll live forever,” you may never get around to the things which are most important to you. That’s why the second part is attached – the bit about “living as if you’ll die today.” That may be good advice when it comes to valuing our relationships and making the most of our limited time on this earth, but it’s horrible financial advice.

Be Responsible and Plan

If you want to make decent fiscal decisions, then live as if you’ll last until you’re 150 or so. Plan for the future and all its potential complications, not because we want to live in fear or miss enjoying the ride, but because we want to be responsible adults who rely on more than a few motivational posters to guide our life choices.

I don’t mean to sound bitter. I’m not. That’s not why I’m talking about this. I’m bringing it up because, while this IS a great time to be a young adult with so much potential and opportunity ahead of you and so much nonsense behind you, you’re also part of a generation brought up on unicorns and rainbows and thinking happy thoughts in place of making good decisions. Now, I love me some unicorns and rainbows and I believe there is much to be happy about, even in these weird times – but alongside those things, I’ve learned from long, hard experience that we have to be responsible and make good choices.

There are no guarantees in this life, but we can dramatically shift the odds one way or the other. So let’s talk about setting financial goals for your 20s, shall we?

Laying Financial Foundations

There is one motivational poster-type quote I really like. It’s from Henry David Thoreau, the famous Transcendentalist thinker and writer you no doubt had to read about in high school:

“If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.”

Dreams are a good thing. Plans and hopes – all perfectly healthy and appropriate. But those castles in the air don’t mean much without a foundation. Eventually, like Wile E. Coyote after he’s run out of solid ground, they’re going to notice they’re hanging in mid-air and plummet to the earth with an unpleasant crash at the end.

I like to think of it as setting realistic financial goals which spill over ever-so-slightly into rainbows and unicorns. Like a kite, they’re grounded – but stretching towards the sky. Yes, I sound like one of those annoying motivational slogans I was criticizing only moments ago, but I want to be clear that it’s GOOD to have lofty goals. If you’re ever going to reach them, or even get close, however, you’ll need to keep a solid hold on your end of the string. That’s where realistic financial goals come in.

So what’s the First Step of financial goals for your 20s? That’s easy.

~ WRITE. IT. DOWN. ~

There’s simply no substitute for a written plan. Just like a written budget, putting it on paper brings a degree of reality and specifics that no amount of talking about stuff can match. It’s fine if that “paper” is a document or spreadsheet on your computer, as long as it’s readily accessible to all concerned parties. What matters is that you hammer it out. If there are two of you, hammer it out together.

If for some reason you don’t have a written budget, do that first. You can’t plan for the future if you’re not being strategic about the present.

Paying Down Debt vs. Saving for the Future

So you’re ready to get serious about setting financial goals for your 20s. Inevitably, the question is going to come up: is it better to pay down debt first, or keep making minimum payments in order to invest or save for the future?

The answer is “neither.” Ideally, you should prioritize reducing or eliminating your debt while still getting started on an emergency fund (short-term planning) and investing in your retirement, your kids’ college, etc. (long-term planning). That’s true whether you make $250,000 a year or $25,000 – although it’s certainly a bit more challenging if it’s the latter. But both are important, so we try to find a way.

If thinking about this has you discouraged, look at it this way – even if you’re not saving MUCH and not paying off your debt as QUICKLY as you’d like, the fact that you’re thinking about it and have a plan at all (ANY plan) put you ahead of many, many others. And by starting on financial goals for your 20s, you’re leaving yourself plenty of room to get it all figured out.

Another way to build positive momentum is to set smaller, realistic goals along the way.

If you have $10,000 in credit card debt and a combined income of $75,000 a year, you’re probably not going to eliminate that by next spring, no matter how hard you work at it. But you MAY be able to cut it by 25% by spring.

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You MAY be able to find a lower interest credit card or take out a debt consolidation loan to reduce how much you’re paying on interest and fees instead of your various balances.
You MAY be able to cut your spending each month by $200 and apply that to paying down your card. These are all doable, short-term goals you can meet. When you do, celebrate – not by going out and spending money, but by making a nice dinner at home, binging on a favorite series, or whatever you consider a good time and doesn’t eliminate your progress in one wild evening.

As I said, you’re at the perfect stage of your life to be thinking about these things. I assure you, starting these conversations at 40 or 50 is much more difficult. Sorting out financial goals for your 20s may not be completely quick and easy, but it’s better now than it will be at any other time of your life. Check out any of the reputable news or financial sites that lay out recommended financial goals by age and you’ll see what I mean.

Today You’re Tired; Tomorrow You’re Re-Tired

Chances are your employer offers some sort of retirement plan for full-time employees. It’s not unusual for the company to provide some benefits, then give you the option of additional contributions. I’m not going to try to address every possible variety of employer or state-based retirement plans, but I will say this:

Pay Attention. Read the Handouts. Ask Questions.

Many of us go ahead and sign without really thinking about what is or isn’t included. If asked, do you even know what your contribution is towards retirement? Do you have a 401(k), a 403(b), an IRA, or something else? Setting financial goals for your 20s isn’t about me telling you exactly what you need – there are plenty of articles about that already out there. It’s about me harassing you to stop and spend some time having those discussions and making those decisions.

If you’re not sure what you have or don’t, or how it works or doesn’t, contact human resources and politely ask. Dig out those forms, call the name on that card. Yes, if it’s an outside financial service, they may try to up-sell you as you talk – but they WILL talk to you and they’re very good at explaining these exact plans in layman’s terms. It’s what they do, every day.

Be Informed

After you’ve asked all of your other questions, make sure you close with this one: what happens if I change jobs? Many retirement plans these days are portable, but don’t assume – find out.

You’re not limited to whatever your employer provides, by the way. Nor are you out of luck if you don’t have a plan through work. There are other ways to invest and prepare, no matter what your income range. And remember, the reason you’re setting financial goals for your 20s is that even little steps now pay off big in the future.

In short, the details matter. Your choices matter. But your attentiveness is where it starts.

Spending Wisely as You Live

None of this means you shouldn’t make the most of NOW (within reason, of course). If you have even an average income and avoid reckless spending, you should still be able to afford things that matter to you. The whole point of having a budget and planning for the future is to reduce stress and increase your enjoyment – not the other way around.

Keep in mind that study after study shows that the types of spending which most often lead to long-term happiness usually involve doing things WITH and FOR others, particularly those we care about the most. If your choice is between a fancy new entertainment system for your den or an extended weekend trip with the family to go camping or tour a few museums or even catch some movies and weird new food options, the latter is far more likely to be something you look back on with joy – even if the costs are the same.

Smart Debt Management

Keeping your debt manageable isn’t about “ruining your fun.” It’s about reducing your stress and giving yourself a room to take care of actual emergencies or other unexpected situations as they arise. Debt can be a powerful tool, but it easily becomes a burden. You’ve no doubt heard it said that debt should work for you; you shouldn’t be working for debt. That’s why we talk about financial goals for your 20s – so debt can work for you instead of the other way around.

Increase Your Income; Decrease Your Out-Go

It may sound obvious, but one way to increase your odds of reaching your financial goals is to find ways to increase your income. You don’t want to choose a career based solely on money – that rarely pays off in the most meaningful ways over time. But there may be things you could do outside of your regular job, or as part of your regular job, to bump up that paycheck a bit.

Side Hustles

Volunteer for extra shifts. Ask about special tasks that no one else has taken on. Show an interest in moving up in the company. Or, outside of work, have a garage sale for the sole purpose of paying extra towards your credit cards. Offer your crafts or other skills online, or teach kids lessons for a few bucks. Do a little freelance writing, or fix up that old snowblower of yours and let the neighborhood Facebook group know you’re available to clear those driveways and sidewalks at reasonable rates.

Dial back your cell phone plan and streaming services. Do simple things to lower your utility bills. Eat leftovers a few times a week instead of tossing them; eat a home more often and save eating out for special occasions. Try the store brands when you shop. Buy new accessories instead of new outfits. And that favorite local coffee shop I mentioned above? Save it for Saturdays and make your own coffee during the week.

They’re all little things, but they add up quickly.

Conclusion

Let’s recap.

If you’re in your 20s or thereabouts, this is the perfect time of life to begin paying attention to your finances and laying the groundwork for a long, relatively comfortable life. Financial goals for your 20s aren’t necessarily about radical changes so much as attention to details.

Make a household budget and stick to it. Modify as necessary, as long as you keep referencing it and keeping it real.
Figure out what your employer is (or isn’t) doing towards your retirement, and what you can do through that program or outside of it.
Formulate a plan for reducing your current debt. Set both short and long-term goals, and celebrate when you reach even the little ones.
The hundreds and thousands of dollars matter, but you’re already paying attention to them. Notice when you can make or save twenty dollars. Think twice before spending or wasting ten. It’s not about being stingy – you should live and love and be good to others. It’s about being intentional and doing so through a series of choices – not just drifting and hoping. One of the best ways to start saving is to open a savings account, and down below, we listed the best options on the market. You just need to figure out which one works best for you:

If you decide you need some help along the way, let us know. Otherwise, don’t stop building those castles, but do start laying those foundations!

Financial Goals For Your 20s To Start You Off Right