Small Decisions That Slowly Improve Your Finances in Your 20s

The small decisions you make in your 20s can impact your personal finances throughout your life. It all starts with taking control, which is hard, but really important.

Those who aren’t able to keep track of their finances often feel out of control, regardless of whether they’re a six-figure earner or a student on a part-time minimum wage job. Taking control — through small, regular actions — is what enables you to slowly improve your finances, no matter where you are right now.

In your 20s, you’re just getting started, and unless you have a lot of generational wealth, you’re likely to be struggling a little. Here are the small things you can make to put you on the right track.

Check Your Balances Regularly

Knowing what you have, what you owe, and where everything is, can be a significant first step to feeling in control. Balances you want to know (at least roughly) at any given moment include:

• Your checking account
• Your savings accounts
• Your student loan debt
• Your credit card debt
• Any other debt (like a car loan, overdraft, consumer credit arrangement or personal loan)

Watching these balances going slowly in the right direction — even by a few dollars at a time — can have a big impact on your self-esteem and your confidence in your own ability to keep taking steps in the right direction.

Monitor Your Net Worth

If you keep an eye on all of the above, you’ll have a rough idea of what your net worth is. It’s literally just the value of your assets minus your liabilities. In your 20s that’s often simply the money you have minus the debt you carry, and it’s not unusual for it to be a minus number. However, many people find it useful to actually do the math and keep a running total of their net worth, updated monthly.

It’s another figure that can make you feel like you’re making progress, even if it’s just from one minus number to another (slightly lower) minus number. Eventually you’ll go from a negative net worth to a positive net worth. Celebrate it, and try to stay there.

Keep Personal Finance Top-of-Mind

Your 20s is a great time to educate yourself on personal finance, and that doesn’t have to be as boring as it sounds. Find some well-respected financial influencers, bloggers or podcasters who resonate with you and who create content you find fun and easy to consume. Then follow them online, via your favourite platforms.

Make sure whoever you follow is relevant to you, your current financial position, and your goals, whether that’s Dave Ramsey or someone like The Broke Black Girl. In other words, don’t rely on advice from people who have never been in your position.

Use What You Learn

Once you’re following your favourite “finfluencers”, take some steps to act on their advice, but carefully. Get ideas from them, but then make sure you do your own research, and take further advice, before making any big changes or investments for example.

Don’t just read post after post, watch video after video, or listen to podcast after podcast, without taking action. You’re not just following these people for entertainment. Use some of what they teach you to improve your current condition.

Think Before You Spend

This is a simple one, but not as easy as it sounds. Tracking your balance and your net worth, as already suggested, can really help.

When you’re actively trying to get to that positive net worth, or hit the next milestone in your savings account, it can really motivate you to pass on that extravagant impulse buy, or that crazy night out you won’t really enjoy.

Always Compare

You may have heard comparison is the thief of joy, and it often is. The exception in when you’re making a big purchase, or even a smaller one. Always compare prices before buying.

Use online comparison sites whenever you can, and certainly for things where there can be a big difference in cost for similar features. (Think things like insurance, credit cards, and vacations).

And those impulse buys you avoided? If you get home and still feel like you need what you nearly bought, search for a cheaper version online. Whether it’s a pair of designer shoes or a new fishing rod, there’s almost certainly a better bargain to be found somewhere online.

Learn to Value Your Financial Decisions

Someone recently told me she was more proud of driving an old, mid-range car that was fully paid off, than she would be of buying a brand new, top-of-the-range vehicle with a $800 payment. She followed up with, “But it’s not a pride you can really revel in online, is it? It’s not a very aesthetically pleasing kind of pride.”

She was joking, but I know exactly what she meant. Your social feeds may be full of friends and acquaintances showing off their brand new cars, or homes, or exotic vacations. We all understand what is meant now by an “aesthetically pleasing” life. Which is why it’s so vital to learn to have pride in the good financial decisions you make that don’t translate to that.

Whether it’s the fully paid off vehicle, the paid-in-full-every-month credit card, or the still-low-but-steadily-increasing credit score, take pride in what matters to you. Don’t worry about whether you can post a pleasing visual representation of it online.

Small actions, taken regularly, add up. Start where you are and work with what you’ve got. And celebrate — internally at least — every step in the right direction.

Frequently Asked Questions