From a busy social life to beginning to pay off student loans, your 20s can be a hard time to save for the future — especially with retirement decades away.
"In your 20s, maybe you're just out of college, have some student loans, have your first job," says Nia Gillett, certified financial planner at Gen Y Planning, a firm that focuses on young professionals. "It can be easy to say, 'Oh, I finally have money,' and just start spending it."
But saving in your 20s isn't impossible. In fact, people in their 20s were able to save an average of nearly $5,580 last year, according to data from New York Life, putting them third on the list of age groups that saved the most in 2023.
That's less than the average amount of $7,148 people in their 20s aimed to save, but how much should you really be saving? That amount can change based on whether you're single or not, how old you are and how much you already have stashed away, says Gillett.
Social media in particular can make it hard for young people to save more, she adds.
"You're bombarded with ads and these lavish lifestyles, which can tend to make people want to spend more than they actually have," she says. "If you don't have a way of tracking that or budgeting, it can be very easy to overspend and then get caught in credit card debt."
Strategies to save more in your 20s
By prioritizing saving in your 20s, you can capitalize on the power of compounding interest and make the several decades you have before retirement work for you.
In addition to saving for retirement, consider building an emergency fund, where experts recommend holding three to six months' worth of living expenses.
Here are three ways to put away more cash this year, whether it's for retirement or emergencies.
1. Set up automatic transfers
One of the "most effective and easiest strategies" to save more is to set up automatic transfers of a certain amount from your paycheck into your savings account each month, says Gillett.
"This 'set it and forget it' mindset is a very effective way to save and build up emergency savings," she adds.
2. Track your budget
It's easy to spend frivolously in your 20s, especially when you're probably making more money than you ever have before. But it's also important to track your expenses, either with a budgeting app or pen and paper, to help prevent overspending.
"Just have a good handle on what it is you're spending money on," says Gillett. "You can set a savings goal there and put money into that bucket every month."
By understanding how much money you have and where it's going, you'll be able to see what your necessities are and which expenses you're able to cut down on — money that you can then save instead.
3. Find a good strategy to pay down credit card debt
Members of Gen Z, who were born between 1997 to 2012, named credit card debt as the second most impactful factor on their finances last year, according to New York Life's "Wealth Watch" survey.
Aggressively paying down your credit card debt now, as opposed to letting it grow as you age, is an important way to improve your financial health and be able to save more, says Gillett.
She recommends trying to transfer your credit card balance to a 0% APR card, which charges no interest for a fixed period of time, and then scheduling payments so that the debt is paid off by the time the 0% interest rate expires.
"It's a great way to get out of credit card debt and not just have a third of your payment going toward interest every month," Gillett says.
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