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If you’re in your 20’s, what you do with your money now could have a lasting impact on your financial future. Hopefully you’ve already accepted and come to terms with the money truths, so it’s time to start getting serious about managing your money.

It might seem intimidating at first, but trust me, managing your money isn’t that difficult. Short term goals can easily be attainable, while long term goals may require a little more work, getting there will be easy as long as you have a plan.

managing your money

How to manage your money and save

Spend less than you make – This is one of the most basic principles of personal finance, yet it’s so easy to get in over our heads when we’re in our 20’s. I hate to generalize but millennials seem to expect only the best as soon as they land their first job; a nice car, designer clothes, eating at all the trendiest restaurants, and yearly vacations are so much fun. Well those things cost money and if you’re spending more than you make, you’ve got a problem.

The easiest way to keep your spending in check is to track your spending– all of it. Literally write down everything you’re spending money on for a month or two. With this information handy you should easily be able to make adjustments and free up your cash flow.

Make a realistic budget – Part of the reason why people struggle to spend less they make is because they don’t have a realistic budget. Well now that you’ve tracked your spending it should be easy to put together a budget. Take a look at how much you’re making a month and then subtract all your expenses; don’t forget to include any savings, but more importantly make sure your budget is realistic. Spending $600+ a month on entertainment might be “affordable” but it won’t help you reach your long term goals.

Pay yourself first – This applies to both short and long term savings; I’m talking about vacations, a down payment for a home and of course retirement savings. By paying yourself first, your guaranteeing your savings goals are always being met. Money in your 20’s can be difficult to manage so don’t fall into the trap of spending first and then saving if you have something left over.

Take free money – Free money doesn’t come around often so if it’s ever presented to you take it! Now don’t go do something illegal, the free money I’m talking about is from employer pensions, company stock plans, or any of government grant. Pensions are becoming increasingly rare so if you’re employer offers one, sign up right away. Stock options can be highly lucrative so maximize your contributions. Government grants apply only in certain situations e.g. the child education savings grant, but anyone can take advantage of their TFSA and RESP.

Educate yourself – By now you’ve probably realized that the education system has done a terrible job at teaching you anything related to financial literacy, but don’t worry, managing your money is simple once you educate yourself. Start by reading a book about personal fiance, there’s a lot out there so try one of my recommendations. If you read just one book, you’ll probably know more about money than 70% of the population, that’s a good start.

educate yourself

Reduce debt – Managing your money can be near impossible if you’re constantly making debt repayments, but hopefully at this age, the only debt you have is student debt. Even if you have consumer debt, just set up a debt repayment plan so you can get on track. When you finally do clear your debts, don’t be afraid to celebrate, being debt free is quite the accomplishment.

Avoid Fees – When people start investing they usually begin with mutual funds. This is a good way to start, but aware of the management expense ratio (MER) that’s associated with your fund. The average MER is between 2.5-3%, this might not sound like a lot, but when you compound that over the rest of your investing life, that could be 10’s if not 100’s of thousands of dollars.

Some mutual funds also carry a deferred sales charges (DSC) which can last anywhere from 5-10 years. This fee is a percentage of the value of the shares that you plan on selling and it’s at its highest in the first year before gradually decreases until it hits zero. Try to avoid any mutual fund that has a high MER and a DSC.

Build your emergency fund – Building your emergency fund can be tough in your 20’s since your pay is usually crap, but don’t underestimate the importance of saving for one. Shit happens, you could get laid off, you might need medical attention, or your car might need repairs; unexpected things happen so make your emergency fund part of your budget.

Learn more skills – After getting a post secondary education and landing a job, you would think that you’re on a path to success but the reality is, there’s a lot of competition out there. The scary thing is, our economy is crap so you always want to pick up more skills to make yourself more valuable. If you’re smart some of these skills will help you bring in some freelance income. Having a side hustle is never a bad thing.

Final word

If you haven’t figured it out by now, managing your money is tough in your 20’s. One thing to note, don’t concern yourself over how your peers are doing. Just because they have a new car, and a big house doesn’t mean they know what they’re doing with their finances; for all you know, they’re highly leveraged. Concentrate on your own situation and you’ll be just fine.


  1. bigcajunman on August 10, 2015 at 6:28 AM

    And do not subscribe to lifestyle inflation or “spending as much as I make”. If you were a student, graduated, and started work, if you lived the way you did when you are a student, and don’t try to live up to your parents lifestyle, you will do just fine.

    • Barry Choi on August 10, 2015 at 8:41 AM


      Most people spend MORE than they make =D. Spending as much as I make is slightly better than that I guess. But yes, let’s not get caught up with how everyone else is living.

  2. Tawcan on August 10, 2015 at 10:20 AM

    Great stuff. The best single thing to do is continue living like a poor student and don’t party too much.

    • Barry Choi on August 10, 2015 at 11:24 AM


      I don’t live like a poor student but my expenses haven’t changed much since I got my first job so my savings has increased quite a bit.

      • Tawcan on August 10, 2015 at 11:35 AM

        And having another source of income (from spouse) certainly helps too. 🙂

        • Barry Choi on August 10, 2015 at 11:40 AM

          Well my living expenses have gone up and so has my travel budget, but overall I’m saving much more due to the spouse and side hustles.

  3. seattlegirluw on August 10, 2015 at 3:40 PM

    Yep, the hardest obstacle is not comparing yourself with peers who are buying all the latest gadgets or nice apartments. If you can get over that, you’ll be golden.

    • Barry Choi on August 10, 2015 at 3:43 PM


      Yes way too many people compare themselves to others, what they don’t realize is that a lot of those people are probably in debt.

  4. Our Big Fat Wallet on August 10, 2015 at 11:31 PM

    I’d take it a step further and say not only reduce debt but eliminate it entirely. I came across someone who managed to save enough for a down payment on a house but also carries a balance on their credit card

    • Barry Choi on August 10, 2015 at 11:37 PM

      Our Big Fat Wallet,

      Yes good point, reducing debt is a start but it’s much better if you can clear your debts. I don’t know how that person managed to save while paying 20%+ in interest.

  5. Sylvia on August 19, 2015 at 8:25 PM

    So true! Time is on your side..compound interest is our friend! 🙂

    • Barry Choi on August 19, 2015 at 8:31 PM


      Compound interest is literally my best friend.

  6. Chonce on August 20, 2015 at 11:24 AM

    A lot of people forget to pay themselves first and it’s so important. It’s easy to get so caught up in paying bills and covering other expenses that you forget to save and work toward your personal financial goals. Right now I’m focusing heavily on paying down debt and beginning to invest. I feel like my debt is blocking me from being able to achieve a lot of other things so once it’s out of the way I can start working on the next goal and begin to manage my money even better.

    • Barry Choi on August 20, 2015 at 11:31 AM


      Such a simple concept yet so many of us choose to spend first instead of save first. At least you have a plan and a goal, can’t say the same for most people.

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