I’m 27. So, like, I’ve been around the block, but not that many times. As it relates to being in my 20s, though, consider me tenured. I’m a sophomore-20. Junior, even.

These days, there’s a lot of talk about what us 20-somethings should or shouldn’t spend our money on. How soon should we pay off our student debt? Do we buy a home instead of rent? If so, how in the world do we save enough money to do so?

The value of the dollar was not what it was 10 years ago, and as such, our spending habits aren’t the same as our parents.

In your 20s, responsible financial management is crucial for building a solid foundation for your future. Here's a breakdown of what you should and shouldn't spend money on during this period:

Here’s What You Should Spend Your Money On in Your 20s

Investing in education and acquiring new skills can and will lead to better career opportunities and higher earning potential. And I’m not just talking about going to college, because that isn’t the only guarantee to success, if at all. Consider courses, certifications, or workshops that align with your career goals.

Invest in personal development through books, courses, and experiences that help you grow as an individual. For instance, I invested in books like 

 to help me build my professional assertiveness, and now I only sometimes—sorry, occasionally—apologize.

 have enough money to cover three months’ of living expenses. There are currently 

six million people without a full-time job

 can’t afford a $1,000 emergency expense.

Building an emergency fund should be everyone’s top priority. Full stop.

Aim to save at least three to six months' worth of living expenses to cover unexpected setbacks like medical bills or job loss. Plus, start contributing to retirement accounts early, such as a 401(k) or investment retirement account (IRA). The power of compounding can significantly benefit you in the long run, plus it’ll compound (literally) in your sleep.

I was once between jobs and had to float myself for six months. Six months, people! Having an emergency fund isn’t just a nice idea. Life is unpredictable, and the harsh reality is that most of us will have to access our emergency funds at some point in our lives.

Health is wealth. Prioritize health insurance to protect yourself from unexpected medical expenses. It may hurt to cough up hundreds of dollars in health insurance each month, but I promise you it’ll hurt even more paying a debt sheet without health insurance.

In the US, a single uninsured trip to the emergency room will cost you 

. God forbid you have broken bones that require surgery to fix, you’ll have to pay $10,000.

Because our 20s lay the groundwork of financial success or demise for decades to come, it’s important to avoid unnecessary debt as much as possible, and nothing will put you into debt more than medical bills.

Your wallet won’t be the only thing that’ll hurt either—your credit might take a hit too. As a college student, my mom and I miscommunicated on a measly $30 medical bill and years later it got sent to collections. My credit score tanked, and it took me two years to build my credit back up.

Debt threatens your final good standing, and also 

, which as we’ve learned above is Very Important. Focus on paying off high-interest debts like credit card balances to avoid racking up credit card fees from interest rates.

For lots of people I know, it’s been helpful to set a target payoff date or dates. There’s also zero shame in refinancing your loans or using loan forgiveness programs. As I mentioned in this article, automatic payments can also be hugely helpful in ensuring you pay your loans off on schedule.

Here’s What You Shouldn't Spend Your Money On in Your Twenties

. While dining out can be enjoyable, frequent restaurant meals can drain your bank account. Ditto with impulsive purchases. Unused subscriptions can also trap you. Review your monthly subscriptions and cancel those you don't use or need.

Prioritize paying down high-interest debts like credit cards and avoid excessive spending on luxury items, gadgets, or clothing that you don't genuinely need. Luckily, there are lots of 

 available to choose from and even more options to 

I’m currently in my free Spotify era but Premium LinkedIn era. One is definitely more fun than the other. Take a shot in the dark at which one is more fun to pay.

Be cautious about overspending on your rent or mortgage. Aim to spend within or around 33.3% of your monthly take home on housing, obviously the lower the better. High housing costs will strain your budget quicker than any other bill.

Plus, the more you pay in housing, the less you’re able to shovel money into your savings, which puts you at risk of not having enough money to pay your bills and or rent if you lose your job (to name a few).

Listen, I want to drive a beamer just as much as the next girl, but I’ve considered whether I can afford an expensive car now and a decade down the line. High car payments, insurance, and maintenance costs always end up being more than you think they’ll be, and if you just need to get from point A to point B, why shell out on a nice vehicle?

While shopping for a new car, I really wanted a car with a push-start button. (I’m a little vain, twist my arm.) That fancy push-start button got old after like a week, but you know what got older? Paying $100 more each month for my new, cool girl SUV. I can’t tell you how many times that extra $100 would have come in handy for a trip planned or for Christmas gifts, but instead I’m paying $100 extra to push a button.

(The $100 is for more than the button, but you get the idea.)

4. Payday Loans and High-risk Investments

, which are short-term, high-cost loans, and high-risk investments that promise quick riches but carry substantial risks. These can lead to financial disasters, emphasis on disasters.

Here are some telltale signs of high-risk investments:

Small or young businesses that haven’t proven they’re profitable yet

Those pyramid schemes that the popular girl from high school keeps messaging you about on Facebook.

Remember that financial priorities can vary based on individual circumstances and goals. That’s why it’s imperative that you create a budget specific to your expenses based on clear financial objectives. From there, it's equally important to regularly review your spending habits to ensure you're making progress toward your financial goals.

Out: excessive spending and mindless entertainment.

Don't try to compete with others' spending habits or lifestyles. Focus on your financial goals and what's best for your situation. In my early 20s, I did lots of things, financially and otherwise, that assuaged my fixations in the short term but screwed me over in the long term. The older I get, the more I realize it’s important to think things through with a bird’s-eye view.

Money doesn’t last forever—and neither do income sources. If we’re not constantly being smart with our money, ensuring our access to it, or safeguarding the money we have now for the future, we’ll kick ourselves down the round.

Luckily if we are smart with our money, though, we can avoid costly setbacks and better protect ourselves for the future.

What Should You Spend (or Not Spend) Your Money on in Your 20s? 

I'm 27, and I’m just as curious as the rest of us about how to make money in your late twenties. It's a topic of discussion my friends and I frequently tackle, and I'm constantly reading books on financial empowerment, such as 

For those gunning to become millionaires, this article won't touch on the 

 or teach you how to retire by 30 (if you know how to accomplish the latter, LMK). It will, however, talk through some financial habits I've developed in my 20s to set me up for success down the line. Plus, I’ll share ways I maximize my take-home pay—be it through passive or active income.

They say that the "richest" people in life are the people who position their careers at the intersection of what they're good at, what they enjoy doing most, and what's profitable. I'll add that the "richest" people I know personally aren't afraid to ask for more.

The first stream of income is usually the most active stream of income: your career. The greatest mistake most people make is banking on their active income as their only source of money. The second biggest mistake, IMHO, is not negotiating that crucial salary.

When I was straight out of college, I raked in $55,000. A couple years later, I jumped to $82,000 (thank you, 

). A little over a year later, I received an offer from a well-known tech company and hit six-figures. I’ve gotten lucky in my career, but I also haven’t been afraid to switch companies or ask for more money when I felt I deserved it.

Recently, I grabbed drinks with colleagues I worked with at that six-figure job, and we shared our salaries openly with one another. One man with two decades of experience made $10,000 less than I did. We figured out that we were offered the same base pay and sign-on bonus, but he didn't negotiate either—whereas I asked for the 10k spike and got it.

In his case, a single email or phone call was the only thing that stood between him and $10,000. Rule number #1: Always 

You call it freelancing, I call it good old-fashioned hustle. You call it side jobs, I call it my next vacation.

Side hustles, which include everything from freelancing to one-off gigs, are one of the most popular ways to create additional income streams, especially in today’s 

. Between Lyft, Doordash, Airbnb, and other contractless jobs, hustling on the side can provide a steady flow stream while letting you call the shots.

Building and maintaining an online presence can also open doors to various income streams. Ergo: influencers. Consider starting a blog, YouTube channel, or podcast focused on your niche. As your online following grows, you can monetize through ads, sponsorships, affiliate marketing, and merchandise sales. One of my best friends is an influencer on TikTok, and let’s just say she brings home the bacon.

In fact, more and more influencers—a.k.a. content creators— have taken to TikTok to share their monthly earnings. One user, Margaret Skiff, shared in a video that she made $4,450 one month from brand partnerships alone. (And for some TikTok creators, that’s on top of their 9–5.)

Similarly, two years into my freelance writing career, I was approached by a company that was in a pinch for content. They told me they'd pay me a premium (whatever that meant) to bust out ten articles in two days. Without knowing what they meant by premium, I rolled the dice, and asked for $5,000 because, why not? And guess what? They went for it!

Disclaimer: we do not endorse or are affiliated with the TikTok creator, Margaret Skiff.

I won't pretend I know a thing about real estate. I've lived in major cities for most of my 20s, and I was always more enticed by living in a city apartment versus owning my own property in the suburbs. Well, that, and I don't know a lick about how to maintain a home.

I sat down with Real Estate Professional, Megan Volk, and she explained, “When it comes to buying versus renting, it always comes down to monthly affordability. If your mortgage will be the same amount as your rent each month, then why not buy and make equity off your own mortgage rather than pay your landlord's mortgage for them.”


Of course, buying a home is more involved than simply paying as much as your rent, but when you buy you boast the following benefits:

You have a predictable monthly payment each month (as long as you purchase with a loan with a fixed interest rate).

rent out your property and earn passive income

Income Stream Number 4: General Investments

Beyond real estate, there are numerous ways you can invest your time and money in your 20s to reap the benefits down the road (if not immediately). Here are some examples of ways current you can safeguard future you, financially.

Invest in retirement: Saving and investing are fundamental to building wealth and creating multiple income streams, which is why you should take advantage of retirement accounts like a 401(k) or IRA in your 20s.

Invest in the stock market: Invest in low-cost, diversified investment options like 

 to grow your wealth over time. Start small if needed, but the important thing is that you start sooner than later. The key is to get started early to benefit from compound interest over time.

Invest in your education. Adding another feather to your cap skillswise can pay significant dividends. Take courses or earn certifications related to your field of interest or expertise. You can even consider learning new skills, such as digital marketing or coding.

None of these will increase the money in your back pocket overnight—and not every venture will succeed. But as the saying goes, with consistency comes results.

Similarly, networking has been key to driving multiple streams of income, mainly in snagging freelancing writing gigs. Ditto with working with recruiters. I once spoke with a recruiter, only for the gig I was interested in to fall cold. Six months later, he called me about a new prospect, and I landed my favorite job to date—a job that, ahem, increased my salary by $30,000.

Attend industry events, join professional organizations, and connect with like-minded individuals. Collaborations and partnerships can lead to new opportunities that, in my case, increased my salary threefold.

As with any financial endeavor, such as putting faith into a high-yield savings account, you have to wait for your money to appreciate, but with passive income streams in place, your cash will grow in value without you (barely) lifting a finger.

I'm 27, and I’m just as curious as the rest of us about how to make money in your late twenties. It's a topic of discussion my friends and I frequently tackle, and I'm constantly reading books on financial empowerment, such as The Psychology of Money...

At 27, the author shares her methods for creating multiple income streams through career moves, side hustles, real estate, and investments.

What Should You Spend (or Not Spend) Your Money on in Your 20s?

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What Should You Spend (or Not Spend) Your Money on in Your 20s?

I'm 27—Here's How I've Established Multiple Streams of Income in My 20s

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