Financial Checklist for Your 20s: Foundation Building

Congrats, you get a major high 🖐️ for being here! Your 20s are ALLLL about setting the groundwork for a solid financial future, and because you’re reading this, you’ll have a great headstart. Even if you’re starting in your career, it’s the perfect time to build important habits that’ll pay off for decades. Literally. 

Sure, you might not have a lot of disposable income yet, but what you do now with your money (like budgeting and starting to invest early) can have a massive impact later all thanks to the power of time and magic of compound interest. 

Think of your 20s decade as a training ground for building financial independence. You can use this checklist as a reference. Small, consistent moves now will set you up for the big wins later!

1. Build an Emergency Fund

It’s SCARY when unexpected expenses come up, and you’re not prepped for it. 40% of Americans can’t cover a $1,000 emergency expense, so let’s not be part of that statistic! Start small and save $500 to $1,000 for your emergency fund. Then, you can work your way up to having 3-6 months of living expenses. For example, if your monthly expenses are $4,000, then you should aim to save $12,000 – $24,000 to cover your bases. Just multiply your expenses by the number of months you want to be prepared for and save it in a high-yield savings account where your money can go much farther than a normal savings account.

Having this emergency fund is so important as a financial safety net in case you lose your job, have medical bills, or have car trouble.

Read more: How to Save $1,000 Fast

2. Start Budgeting

Understanding how much money you have coming in and how much is going out will be vital to your overall financial picture and habits. Since you might have limited income in your early 20s, it’s even more important to figure out what funds need to be allocated properly so you can stretch that money. 

Read more: 10 Surprisingly Simple Ways to Build a Budget That Works

3. Pay Off High-Interest Debt

If you have debt, focus on tackling credit cards, personal loans, and anything with a high-interest balance that can end up costing you more than your original borrowed amount.

Popular methods for debt repayment are Avalanche (taking care of the highest-interest debt first) and Snowball (taking care of the smallest balance first and working your way up). Ideally, you want to take care of the ones with higher interest first, but if you’re the type that gets more motivated by celebrating smaller wins, go for the Snowball method for momentum.

4. Open a Retirement Account

You may have 40+ years until retirement, but your 20s is the BEST time to start contributing to retirement accounts and let compound interest do its thing. You won’t get this time back later.

The easiest way to start is by contributing to your employer’s 401(k) plan, especially if they offer a match since that’s basically free money. You can also open a Roth IRA if your employer doesn’t offer a 401(k). We recommend having both a Roth IRA and a 401(k) to maximize your growth, though.

Start contributing with whatever amount you can because even $50 a month makes a huge difference down the line. Maximum contributions can change annually, but the max for 2025 is $23,500 for a 401(k) and $7,000 for a Roth IRA.

5. Start Investing (Even Small Amounts)

You should aim to max out your Roth IRA and 401(k) first and when you have additional money after taking care of savings, you can use robo-advisors or apps like Fidelity, Betterment, or Acorns to automate small investments. Also called a taxable brokerage or non-retirement account, this type of account has no limit to how much you can contribute and money can be withdrawn at any time, however, we’re considering this a long-term play of at least 20 years or more.

You can focus on low-cost index funds or ETFs that track the market. 

Read more: Investing for Beginners: It’s a Marathon, Not a Sprint

6. Establish Good Credit

Good credit helps secure better loans, rent apartments, and even get a cellphone. Lenders want to know you can make timely payments, and your credit score indicates your habits. So use your credit cards responsibly and keep utilization below 30% across all your cards. Pay the balance in full every month and avoid late payments!

7. Learn Financial Basics

You have to keep learning! Understanding key concepts like compound interest, diversification, inflation, how taxes work, and budgeting fundamentals will help you avoid common mistakes later. Reading this article is a great start, so keep reading The Money Move for more helpful knowledge!

We also recommend these books: The Simple Path to Wealth by JL Collins, The Psychology of Money by Morgan Housel, and Your Best Financial Life: Save Smart Now for the Future You Want by Amanda Lester.

8. Set Career and Income Goals

As you start your career journey, think about how you can grow your income over time. Consider additional certifications, side hustles, and investing in training if it aligns with your goals to help increase your earning potential!

The Money Move

Your 20s are such an important time to start laying the financial groundwork for your future self. Starting now can make all the difference to becoming financially independent much earlier than later if you don’t foresee yourself working until your mid-60s. Don’t miss out on these important growth years because this is time you’ll never get back!