7 Tips to Living Frugally in Your 20s.

Are you looking for ideas on living frugally in your 20s? Well, I’m here to help you!

Your 20s are usually the portion of the life that endure the most change. You might be finishing college or trade school and diving headfirst into your first big boy/girl job. Along with that, you might be preparing to move out of your parent’s house. Whatever your next step is, it can be scary to figure out just how you’re going to financially survive on your own. That’s why starting the habit of living frugally in your 20s is so important.

One of the biggest downfalls of the American education system is that no matter how much school you have, whether you have a high school diploma or a PhD, it is almost guaranteed that you never had any formal education around finances or money management. Because of that, you might feel a bit lost. Don’t worry, you are not alone. You are part of a system that failed you. But that doesn’t mean that you can’t start learning now! I mean, you already clicked on this article. That’s step 1!

So, whether you are just entering your 20s and want to start off on the right foot, or you are well into your 20s and you still feel like you have no clue what you’re doing – I am here to help!

Here are some free and easy tips to start living frugally in your 20s!

You Are Not Alone!

As I enjoy the last year of my 20s before hitting the big THREE-ZERO, I’m going to reflect on some of the strategies that I used to start the next decade of my life (mostly) debt free, comfortable, and secure.

I am only two months shy of my 30th birthday and it just blows my mind. As I reflect on my 20s, I keep thinking about the amount of CHANGE I endured in those 10 years. I lost one of my childhood best friends in a car accident right after I turned 21, I moved away from my hometown and bought a house when I was 23, I had my heart broken, and I met the love of my life. That’s a lot going on for one decade!

Between all the positive and negative, I’ve also made a lot of mistakes, both personal and financial. I spent money where I shouldn’t have, as well as not spending money where I SHOULD have. However, with a few strategies and a little bit of luck, I am entering my third decade with a 6-month emergency fund and good spending habits. I am here to help you do the same!

If you are a total beginner and you want to start at the very first page, check out my article on frugal living for beginners!

1. Learn to Manage Your Money

Since I was raised by a single mother who was raised my parents who grew up as poor farmers during The Great Depression, I learned a lot about saving money while I was growing up. However, I was in my mid 20s before I learned how to really manage my money. I have a lot of really awesome friends and colleagues to thank for that education!

So, what is the difference between saving money and managing money? Let’s compare it to the difference between being cheap and being frugal. When you’re saving money, everything you do is about saving a dollar. You buy the cheapest products, you miss out on experiences, and you stuff all your money under the mattress for a rainy day.

On the flip side, managing your money is about making your money work for you. You might buy a more expensive products or service, but it will last you much longer and make your life that much simpler. You spend money on the experiences you want, while voluntarily missing out on the ones that may not tickle your fancy. You learn to utilize tools such as high yield savings accounts and IRAs (individual retirement accounts).

So, what are some ways you can manage your money?

Open a High Yield Savings Account

A high yield savings account is just a savings account that earns you more money in the form of interest. Basically, you’re making money by doing nothing. To learn more about high yield savings accounts, check out this article I wrote all about how to pick one.

Open a Retirement Account

Immediately (and I cannot stress this enough) open an IRA or 401k. The best time to start contributing to your retirement is the day you start working. The second best day is TODAY. Even if you only put $20 a paycheck in it, it is a start! If you need more information on what an IRA or 401k is and how to open one, check out this informative article by Vanguard, one of the top investing companies.

Track your Spending

Start to build a habit of tracking your spending. This will force you to pay attention to where your money is going and make it a whole lot easier to make changes if you need to.

Build a Budget

After tracking your spending for 3 months, build a budget. This will help you with controlling your spending and allow you to put more money in the places it needs to be. If you need more information on how to build a budget, check out my guide to budgeting.

Automate your Savings

Your 20s are the time when you are constantly jumping from job to job. When you switch jobs or start a new one, automatically put a portion of your paycheck towards your high yield savings account and your IRA (or 401k if one is offered). By automating your savings, you won’t even know the money is missing because it was never there to begin with! As you get raises and promotions, remember to increase what you are adding to your savings and retirement accounts.

Be Very Intentional with Your Spending

The biggest thing about living frugally in your 20s is that you have to remember to be very intentional about your spending. Do your research before buying a product, set a limit on how many times you go out per week, and only give your time and money to those things that are important to you.

I am reminded of this quote by an unknown genius.

Remember that the most expensive or well known product may not be the best quality! It just means they have a better marketing team.

Frugal Living in Your 20s – Managing your Money

You do have to learn how to save your money, but you also need to learn how to manage your money. Start doing that in your 20s so that you aren’t struggling with it in your 30s when you’ve got a mortgage and mouths to feed – either the human or four-legged kind.

2. Concentrate on Paying off Debt

Most of us come into our 20s with debt, whether it’s student loans, car loans, or credit card debt. Whatever it is, concentrate on getting it paid off quicker so that you don’t have to worry about it anymore!

There is so much to understand about debt and loans, there’s no way I could cover it in this article. Keep your eyes peeled for a follow up article. However, for now, let me define some basic terms for you to help you scratch the surface.

What is Debt?

Debt is any money that you owe to anybody or anything. If you have a car loan, you have debt. If you own a home, you have debt.

What is Principal?

Principal is the price tag you saw when you bought the item. It is the balance on your loan. So, if the price tag on your car was $20,000, that is the principal for your loan.

What is Interest?

Interest is the amount of money the loaner charges you for lending you the money. So, on that $20,000 dollars, let’s say you have a 5% interest rate. That means you are charged 5% of that $20,000 per year in order to have that loan. As the principal on the loan is reduced, the amount of interest is reduced as well. For example, if you get your car loan down to $10,000, then you are only paying 5% on $10,000. (There are various types of loans that do various interest strategies. This is the most basic and most common type of interest).

How do you Pay Off Debt Quicker?

DISCLAIMER: PLEASE DO RESEARCH ON YOUR TYPE OF LOAN. EACH LOAN IS DIFFERENT AND THIS STRATEGY MAY NOT WORK FOR YOURS.

For a standard loan, the easiest way to pay off your debt faster is to put extra money towards your principal balance. Since interest is charged on the principal that you owe, getting that principal balance lower will therefore lower the amount you pay in interest. An extra $20-$50 a month towards your principal balance can go a long way.

Please be careful. There are institutions developed by Satan himself that will actually charge you for trying to pay your loan off early!

So, can you budget out an extra $20, $50, or $100 towards your debt principal in order to get it paid off quicker? Can you get a part time job or walk dogs around your neighborhood in order to bring in some extra cash to put towards this debt?

Just think, the quicker you get that debt paid off, the quicker you get to have that $400 car payment back in your wallet! It’s worth doing the work now while you’re young (ish), full of energy (kinda), and don’t have anyone relying on you to put food on the table.

Tracking your debt is a great way to keep track of where you are and how much you have left to pay. You can download my completely free debt trackers to help you out!

Multiple Debt Tracker

Single Debt Tracker

3. Be Proactive instead of Reactive

Learn to be proactive about your saving instead of reactive about your debt. Okay, Ms. Fortune Cookie, what does that mean?

It means that if you’re planning to make a big purchase, or even a not so big purchase, make sure you are taking steps to save for that purchase before you make it. If you’d like to buy a new car in three years, start saving now. Calculate out what you can realistically set aside each month to save for said car.

By being proactive about your money, you are prepared for emergencies. If you wait until you’ve already bought the car, it’s much harder to skip a payment when your dog has an emergency vet bill. If you start saving for the car beforehand, you can skip putting your “car payment” in your savings to pay for the emergency vet bills without demolishing your credit score.

This can apply to items or events that don’t cost thousands of dollars as well. If you’re planning to go on vacation next month, make sure you start saving this month. That might mean skipping some nights out or morning coffee runs.

By being proactive about your saving, you can save yourself the financial stress when emergencies ultimately arise.

4. Get A Roommate (or 2)

If you’re trying to move out on your own, consider getting a roommate or two to help with the cost of living.

I bought my house when I was 23. For the last 7 years, I’ve had roommates consistently renting out my extra room. When I first bought my house, I had no choice. I wouldn’t have been able to make it without my roommates. But now that I’m nearing 30 and I’m making a little bit more money, I don’t NEED the roommate, but why on earth would I turn down the extra money?!

Renting out my extra room is the extra cash I use to do the things I want to do. This is the money I put towards my vacations and making updates to my house!

Having a roommate isn’t everybody’s idea of a good time, but it certainly helps keep your financial stress levels down. Not only are you splitting rent, but you also split the cost of utilities and maybe food.

Fortunately, I’ve been very lucky in the roommate department and have gotten along great with almost everyone I’ve lived with. If not the greatest friends, we were civil at a minimum. Things don’t have to be perfect in order for it to work. Don’t let one bad roommate ruin your vision of roommates forever!

Plus, you can always look at having a roommate as a trial run for living with a significant other!

5. Wait for Sales

Start building the habit of waiting for sales before you make purchases.

A big part of this is learning patience and contentment. You’ve gone 20 years without that Apple watch, two more months isn’t going to kill you. And just because everyone else has it doesn’t mean you needed it yesterday!

Almost every store will run a sale at every holiday – like Memorial Day, Fourth of July, or Labor Day. Black Friday is a big sale day, but that doesn’t mean it’s the only sale day. If you know a holiday is coming up, wait a few weeks and save up the money for your purchase.

You can make finding sales and coupons easier by downloading apps like Coupon Cabin or Microsoft Edge Shopping to automatically run coupons for you when you are shopping online!

However, this doesn’t just apply to big purchases. It can also apply to small purchases and everyday purchases. You can download a lot of easy to use couponing apps to help you save money at the grocery store.

Stores want your money and nothing attracts shoppers like a good sale!

6. Shop Thrift/Reuse It Stores

I grew up shopping in thrift and reuse it stores, so it was very strange to me becoming an adult and talking to those that had never set foot in one! Or worse – thought that all thrift stores were run down, dingy places that sold dirty clothes and soiled furniture. gasp!

Don’t get me wrong, some thrift stores are downright nasty. It will be a trial and error to find the best ones in your area. However, there are a lot of really clean thrift stores that are filled to the brim with unique and cost-effective finds!

What are some things you can get at thrift stores?

• Clothes
• Furniture
• Purses/bags
• Books
• Shoes
• Kitchenware

The list goes on, but you get the idea! Remember that dawn dish soap works great, they make washing machines for a reason, and furniture can be painted!

7. Remember That you Can’t Do It All

In large part thanks to social media, we feel like we should be able to do it all. We should be able to have the car we’ve always wanted, we should be able to go out with friends every night, and we should be able to buy all the clothes we want. We get caught up in the comparison game.

“Well, she’s going out with her friends and going on lavish vacations, why can’t I?!” Because she’s broke! In my experience, if you find yourself asking how someone can afford something, the answer 99% of the time is that they can’t. They’ve racked up credit card and personal loan debt. And THAT is a very dangerous game to play.

In any stage of your life, but especially in your 20s, you have to remind yourself that you can’t do it all. You have to turn some things down or find alternatives because they simply aren’t in your budget right now.

It can be extremely difficult and embarrassing to have that conversation with your family and friends, but it is extremely necessary in order to get ahead of the game and set yourself on the right path.

If you’re preparing yourself to have that conversation with someone, try and use this script to help them understand:

Them: Hey, we’re all going into the city for a concert, dinner, and drinks. Do you want to come?

You: I really appreciate the invite but unfortunately, it’s just not in my budget this month.

Them: Don’t be lame, it’s only one night!

You: You’re right, but I’ve had a lot of expenses come up this month so I just wouldn’t feel comfortable spending the money right now. Maybe we can all get together for board games and tacos at my house next weekend?

Them: That actually sounds really fun! We’re actually going to another concert in about 2 months, maybe you can join us for that once since you know about it in advance?

Not to dive down a complete rabbit hole, but if you are trying to set a boundary and someone you are with isn’t respecting that, then they are not a very good friend. I said what I said!

We need to be able to have conversations surrounding money. That conversation can start with you.

There are a million free or frugal alternatives to going out every night or every weekend!

• Board Games
• Bike Riding
• Hiking
• Going to the park
• Making dinner together
• Baking together
• Watching your favorite movies
• Video games

What other frugal alternatives can you think of? Leave me a comment!

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Final Thoughts on Living Frugally in your 20s

As I said in the beginning, not understanding how to manage your money is not your fault. You were set up by a system that has failed you. However, in spite of all of that, you are taking the steps to build healthy money habits.

By following these simple steps to living frugally in your 20s, you can carry these habits well into your 30s, 40s, and 50s! There is nothing that says you have to stop your healthy habits after you turn 30!

What is the one habit you plan on starting today!? Leave me a comment!

Happy saving y’all!

Need More Frugal Living Ideas?

• Frugal Living for Beginners
• 5 Frugal Ways to Save Money
• Top Strategies to Getting Your Finances Under Control