How Much Money Should I be Saving in my 20s?

Create The Right Financial Routine in Your 20s is

Key to Establishing Your

Financial Foundation

How Much Money Should I Be Saving in My 20s

There is a misconception that being in your 20s is all about saving money.  This is far from the truth as it's not really about saving money is more about establishing your financial foundation, having the right mindset and building great saving, investing and spending habits.  Meaning putting money in the right places not the wrong places like Amazon at 2am in the morning when you think $20 cat glasses are a great buy.

Because what you choose to do with your money now you will do exactly the same when you get older. If you are a good saver in your 20s the more likely you will be a good saver in your 30's, 40's and well in to retirement. 

But just because you are a good saver doesn't mean you are a good investor. By understanding your money personality will help you build your confidence around money and how you use it to identify how much money should I be saving in my 20s.

In your 30s lean how to manage money

In your 40s read how to become rich

In your 50+ years learn how to own your own assets and plan towards your retirement

I Don't Earn Enough Money in my 20s to Save!

All too often whether you are in your 20s, 30s or 40+ years the same old saying comes out, "I don't earn enough money to save."

However! A lack of savings really has more to do with what you spend your money on rather than not having enough to begin with. The same mindset that allows this block, allows you to buy that take-away coffee every day, which over the course of a year can be as much as $850! Then, there’s the lunches, instead of bringing your own, add another $1,000 per year. So just in those two “simple” and “harmless” treats, you have just spent $1,850 per year.

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What Would Happen if You Saved a $1 Per Day?

If you saved $1 per day from age 18 to 65, with compound interest paid at just 6%, you would accumulate $96,000 at age 65! 

Forego that coffee each day at around $5, and you could turn that into $480,000 at age 65! Compounding interest is paid on the interest already earned. This powerful fact, and your patience – is the key to accumulating savings over time – and just as importantly, developing a healthy financial routine that your future self will thank you for.

However! You are going to need a lot more than $480,000 at age 65 to retire and live a modestly comfortable life. The Australian Bureau of Statistics thinks that a comfortable retirement is living on $52,000 per year. So, divide your $480,000 by that amount and you can be modestly comfortable for less than a decade.

But let’s say that by the time you’re in your mid 30’s you’ve figured a few things out – like the difference between Good Debt and Bad Debt., you can turn that $480,000 into so much more, and determine your own level of comfort in retirement.

How much money should I be saving in my 20s, a minimum of $1 a day.  Build wealth today, reap the rewards tomorrow.

Building Your Wealth in Your 20s

Don't Ignore Your Finances #1

Understand how much money is coming in and how much money is going out each month. Don't ignore your debt, understand how much you are saving and why.

Invest in The Right Places #2

You need to get your money working for you asap whether that's through shares, property or business.  Just make sure you do the research before diving in.

Invest in Yourself #3

Polytechnic, University or apprenticeships can be expensive and create student debt, but you are building towards your future. Never underestimate investing in yourself. 

Shopping Habits That Cost You Money

"I'm saving money because it's on sale!"

One day sale sign, How much money should I be saving in my 20s

Truth be known, a “Sale” is just another chance to shop! So, make sure that what is being offered to you “on sale” is something you were going to purchase, and have budgeted for. “Sales” are about impulse buying and more about the retailers KPI’s than you!

Do you really need to upgrade your TV or phone or buy another pair of jeans even though you already have ten pairs that are perfectly fine.

Sale assistants will try and push you to buy now as either a sale is ending, it's the last one, or they no-longer make them anymore.  Don't fall for these lines, there will be another sale, there will be more product and if its no-longer available then a newer version will be coming out soon to replace it.  

I'm sure you are starting to understand that it's not about how much money should I be saving in my 20s but how much you should not be wasting money on things or wants.

"My bank would never give me a credit card I can't afford?"

Hand with credit card, How much money should I be saving in my 20s

Well, yes, yes, they would, and they do. It’s not a compliment when your bank gives you a larger than needed credit limit, or another card for that matter. In fact, the banks bank on you not sticking to the promise we all make to ourselves that “I will pay the entire amount each month!”.

They make their money by you paying the minimum amount, or close to it, then spending more again, and that compounding interest mentioned above? It works for the banks in this case, and you pay interest next month, on top of the outstanding balance and the interest charged last month. Even if you are savvy enough to have a 55-day interest free credit card, unless you are ahead of the banks’ ulterior motives, you will get caught out, and that “sale” you saved all that money on – you pay more than the RRP.

If you really need a credit card, then match the limit to your monthly budget and no more! So, when the bank pays you that next “compliment” you can say “Thank you, but no thank you!”

"I can afford to buy that high-end product"

women talking and holding shopping bags, How much money should I be saving in my 20s

You probably can afford it right now, but in 6 months time you will be thinking you didn't actually need to buy the high-end product because you either don't use it now or the lower or mid range product would have worked just fine and would have cost less to buy. 

A good way to reduce your impulse buying or if you happen to buy something you actually need then take your time doing it, especially if it is expensive. Most of the time we make buying decisions far too quickly and regret it later on.  If you find a product you like and need (not want) then spend the next couple of days researching online to confirm it is the right product and it is the best price.   Also check out reviews as they are good indicators whether the product you are after does exactly what it should do.

After a few days of looking around, you will either decide you don't want the product any more or you found another cheaper product that fits your purpose.

Budgeting Made Easy

The simplest way to create the right financial routine is with a budget – yes, that thought puts most people off, however budgets need not be complicated. There are many online versions available, and to get started, get a note book, write down your expenses, starting with the most important one – your home! Whether you’re a home owner/renter or boarder – there’s most likely an amount you need to pay each week to keep you housed.

You can apply this same method to your household expenses, such as insurances, maintenance, rates etc. if you’re a homeowner. If you’re a renter, then allocate an amount for your content’s insurance. 

Next would be transport costs, so include everything associated with how you get from point “A” to point “B”. If you have a car, then make sure you allocate a weekly amount to cover your fuel and annual expenses, such as registration and insurance. Divide by the number of weeks in between such items as maintenance and servicing. Don’t forget toll roads if you use them, and parking costs too. When you break it all down to a weekly amount, you can set that aside in a different account, to accumulate and be ready to pay those bigger expenses when they are due.

Getting on Top of Your Groceries Bill

Groceries is another area which can eat away at your available funds. We recommend allocating an amount for groceries, which can fluctuate from week to week. So, having an amount of say $200 to $250 per week, gives you some room to move. This will vary depending on your individual circumstances, and how many people you’re buying groceries for of course.

So, set you own amounts and test that amount over a few weeks, tweak it where necessary and soon you’ll have a comfortable idea of what your food bill is each week.

Try to avoid popping into the supermarket during the week, “just for bread and milk”. How much do you really end up buying? And that is usually on top of your weekly spend as well. That’s why supermarkets have mid-week specials!

Tips For Saving Money

Enjoy Your Life in Your 20s Without Having to Pinch Pennies

How Much Money Should I Be Saving in my 20s

Make the weekend a takeaway coffee treat and during the week make it at work


Cut Foxtel for online streaming service like netflix or stan

Spend $6 Rather Than $20 for the same movie by waiting until its available online


Put your gym membership on hold over summer or cancel it altogether


Buy books online (Kindle) or borrow from the library


Never buy online when you didn't have the intention to, take a day to think about it

Drink at home with friends instead of drinking out

Establish the Habit of Saving Money

Always look for the most affordable option.  Whether it means waiting for items to go on sale, cutting coupons, or buying second hand.

Start Saving a Deposit For Home or Investment Property

Doesn't matter how much you start saving just start.  If you start early you will be in a better position to buy a house when you are ready.

Credit Cards Can Get Out of Hand

If you can't budget then don't get a credit card, they will take your spending to another level.  If you can control your spending, then only use in an emergency.

Couple drinking coffee, How much money should I be saving in my 20s

How Much Money Should I Be Saving In My 20s

Some of us are paid fortnightly or monthly, budgeting really becomes crucial when you are paid this way, as having a lot of money once a month, can make you feel like you can go to that sale, and certainly afford a $5 coffee!

But can you? 

Really. Maybe it’s the terminology, “afford” can sound like a negative. Of course, you can “afford” that coffee, but what we want you to consider, is what that $5 coffee mindset is doing to the 30 something year old version of you. The one trying to establish their financial foundation and start building wealth into retirement.

Retirement concepts to a 20 something is not generally a consideration. However, you will be that 65-year-old one day, and wouldn’t you rather have that $480,000 multiplied in your pocket because you stopped buying a $5 coffee each day and saved it instead? Now there’s a concept worth thinking about!

Once you have your budget in place for all your essential, your can’t avoid type expenses, it’s time to get real and include a realistic amount for the rest of your spending. Maybe you don’t buy a coffee every day, maybe you do bring your own lunch. Then take a look at where else you do spend your hard-earned money. 

Identify the “must haves”, the “nice to have”, the “wouldn’t miss it” and the “it’s such a waste” type spending that we can all do from time to time.

Now from time to time it’s not a big thing, however, if you regularly buy take-out dinners, or go to the pokies, then maybe ponder what the 65-year-old version of you would rather have you doing, spending or saving that money. After-all when you think that we work for ¾’s of our lives – at least – then wouldn’t you rather have the take-outs and pokies at 65 and really enjoy retirement?

Now a “must-have” means different things to different people, so take a close look at all these, and choose just one to forego, for now, to help create your financial routine.

Having said that, some people opt for working harder, getting a second income, to create that surplus they need to be able to live their life comfortably, and save at the same time. Whatever works for you, that sees you getting ahead and gaining some financial traction and developing your own successful financial routine is to be applauded. 

So as you can see it's not all about how much money I should be saving in my 20s.

Financial Routine:

It’s the same with creating your financial routine, start today! Whether it is as simple as $1 a day, or foregoing that $5 coffee, start saving – something – every day, which becomes every week – every year and eventually becomes normal.

Invest it:

That budget we’ve been talking about, set aside an amount to automatically go into your savings. Then make a promise to yourself and your future financially secure self, that you will continue to grow those savings, until there is enough there to invest. Yes, invest! It’s what all the wealthy people know all too well, you cannot save yourself rich, but you can invest your way to wealth. They do it, and so can you!

Good Debt:

Once you have achieved the mindset of a saver, it becomes so much easier to turn that into the mindset of an investor. Again, small consistent steps in the right direction will lead to a financial routine involving not only the attitude of saving but ultimately, the attitude of wealth creation through securing some “Good Debt”. That is, debt you enter into because it benefits you in the long run, and someone else pays it back! E.g. your tenants. And, did you know that the interest charged on this “Good debt” is a tax deduction for you? The tax office views landlords similar to small business owners, so the interest they pay on their investment loan becomes a cost of doing business and is a tax deduction!

Bad Debt:

“Bad Debt” on the other hand, is debt you create, that you have to pay for. E.g. your Mortgage on your own home, your car loan, your credit cards (if not set up properly), or that TV you put on higher purchase.

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We are surprised when businesses try to put you in the same box as everyone else.  You are not the same as everyone else and that's why we make sure we listen to you and your circumstances.  Grab your free property investing consultation today here. 

Mindset of an Investor

Once you develop the mindset of an investor and you understand the difference between saving with the intent of investing and saving to feel good that you have all this money just sitting in your bank account, which might be earning some interest yes, but did you know that the tax office sees that interest earned as income?

Well they do, and they will tax you on it too. Which is tax after you’ve already paid income tax on that same money! Talk about double-dipping!

Once you get the difference, then you begin to establish your financial foundations.  Now that’s a really exciting time for you, as you enter your 30’s.

We get asked a lot about how much money should I be saving in my 20s, but there is no magical number as long as you're saving or putting money aside to invest it to gain the rewards in the future.  At the same time learning how to control your money behaviours and managing your money by spending wisely.

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