How to be financially successful in your 20s

How to be financially successful in your 20s

Millennials are coming of age and changing the world as we know it. They’re about to be the most influential generation since the boomers. But they’re also facing strong headwinds. The pandemic has hit many young millennials in their peak earning years. Encumbered with historic public debt, rising home prices, stagnant wages and less money to spend, young millennials will need more financial nous earlier in life to get ahead. If you’re a young millennial and want to know how to be financially successful in your 20s, this post is written for you.

What does financial success look like in your 20s?

Success is all about achieving a desired outcome so let’s first establish what that outcome should be for your finances in your 20s. You can’t hit a target you don’t know exists right?

What success looks like for you will be personal. But at a minimum, you want to be doing better at wealth building than your millennial peers. In some areas of finance that really matter, you’ll want to be doing A LOT better. If you’re a high achiever, then financial success in your 20s is all about setting yourself up for financial freedom in your 30s, which leaves you half a century to do work you love and enjoy a beautiful life. Sound totally fly to you? Let’s get on with it then.

Whether your aims are for total financial freedom or to simply be more financially secure, by the end of this post you’ll have tangible and concrete goals and steps to help you on your way.

The millennial financial footprint

Gross generalisations are generally unfair 🙂 so we’re going to take a look at some annual research statistics about millennial finance. Since recent stats are hard to find, we’ve had to dig back to 2015 for some of our benchmarks which are from the US.

Income – average millennial income in 2015 was a tick over $56,000. That’s gross. Take home income would be a smidge less than $50,000.

Expenditure – on average is just north of $47,000/y.

Savings – this leaves implied savings of, well, diddly squat and explains why around half of millennials report living paycheck-to-paycheck.

Debt younger millennials report having student debt of around $26,000 and credit card debt of around $4700. Of those with debt, 16 percent say they owe $50,000 or more. 

This all paints a grim picture for many millennials and it’s likely things have gotten tougher since 2020. The good news is that with different money habits, you can be different. And the pandemic just might be a great opportunity to get ahead for financially savvy twenty something millennials.

Your twenty-something financial habits

Here are the financial habits you need to set in your 20s if you want to be successful with money:

  1. Earn more than you spend
  2. Avoid bad debt
  3. Save like crazy – 30% + of your take home income
  4. Start investing those savings in assets

It sounds easy but if it were, everyone would be doing it. So let’s break it down with 5 steps that you can start today if you want to be a financial success in your 20s.

5 steps to be financially successful in your 20s

Here’s 5 steps you should be taking in your 20’s to be financially successful. None of this is financial advice my millennial money masterminds. These are the 5 things we wish we’d known when we were in our 20s to win our financial freedom earlier.

Step 1 – Put your finances first

Literally no-one does this in their 20s, so if you can pull this off you’ll be well ahead of the pack.

Putting your finances first means becoming financially literate; learning about how to build and manage wealth and then starting to apply what you learn.

The first thing to know is that school doesn’t teach you anything useful about building wealth. All it does is teach you how to get a job, which is not going to translate to financial success or freedom. The other way people learn about wealth is from their parents. So if your parents are good money managers then you have a head start. If not, you’re starting from scratch. But that’s ok! Scratch is where we started and we got ourselves financially free in about 8 years.

Our tip is to focus on these things:

Learn about assets, liabilities, good debt, bad debt, cashflow and tax effective income and investment structures.

Here’s how to start today for under $100

  1. Read our blog. We mean all of it. Start here and here And we’ve got a total bonus for you – its free!
  2. Read these books on building wealth – sign up for Audible for less than $15 a month and get to it.
  3. Watch this webinar featuring wealth educator Robert Kiyosaki about investing in assets and using good debt. It costs a buck.

We promise won’t regret the hundred dollars spent.

Investing in yourself and your financial knowledge is the one thing most likely to determine where you end up in the next few years.

The learning doesn’t end once you’ve nailed these concepts, but there’s enough information in these resources for you to start applying what you’ve learned. Steps 2 to 5 assume you have your head around these concepts and are ready to put them to work.

Step 2 – Get an internet side hustle

The problem with wage earner income

Wage earner income is generally the go to income source straight out of school for most of the population. But it’s also the most highly taxed and time consuming type of income. Having come through 2020, wage earner income is also looking a tad risky. Earning all of your income through the one source that is out of your control means you’ve got nothing to fall back on if that source is suddenly taken from you.

What we are saying is wage earner income is likely where you’ll start, but it is not where you want to put all of your effort. There are income streams that don’t trade time for money directly and you can set them up to be far more tax efficient than a job. Meaning you’ll get to keep more of what you earn. Earned income is not how the rich make their money, if you get my drift…

In your twenties, spend the extra time you’d spend at work to get a promotion on smarter ways to make your money from multiple sources.

These smarter ways take time to build up – so you need to start now!

To be financially successful in your 20s the aim is to build alternate income streams using the skills you already have as… well, a millennial.

Learn how to make money online

Millennials are the first digital native generation which is a killer advantage when it comes to making money from the internet, so go and get yourself at least one alternative internet income stream in your 20s.

Why internet income? Internet income is super powerful because it gives you leverage. Leverage is when you do something once with a fixed cost or time, and it pays you over and over. The internet is where you can use Google, algorithms, coding, bots and online marketing to make money multiple times from one piece of work.

Millennials are really the first generation in history born online. Your 20s is when you need to put this early mover advantage to work.

And the lockdowns of 2020 proved a watershed for internet commerce. More of the world moved online than ever before so its no surprise that we think that is where there’s money to be made.

If you want to know more about leveraged income options, check out this page as well as our Fat Stacks blog where we share tried and tested passive income ideas.

You will need leverage to build wealth and get to financial freedom faster because in your 20s you don’t have access to a lot of capital. Deploying capital (savings and borrowings) is the other primary way you can build wealth and get to financial freedom. If you were in your 30s, we’d look at ways to build wealth using capital.

Step 3 – Become a seriously savvy saver

We’re not talking here about curbing your avocado toast munching, latte-swilling habits (a stereotype I know but a fun one). You need to get serious about squirrelling away your disposable income to be financially successful in your 20s.

Why? Because your savings rate is inversely correlated with your working career. In other words, the more of your income you save, the less of your lifetime you’ll need to spend at work. In your 20s you should be smashing this savings gig out of the park.

Also, because if you want to leverage other peoples money to build wealth in your 30s, you’re going to need some of your own money behind you.

How much should you save?

To put this question in context, average savings rates in the US, UK and Australia are around 10 to 15% of take home income. This won’t make you financially successful in your 20s. It won’t get you to financial freedom. Ever.

You should be aiming to save at least 30% of take home income in your 20s. If you want to be financially free in your 30s, it needs to be more like 50%.


In Australia the average weekly earnings before tax for a 21 to 34 year old is $58,600 a year, or roughly $49,000/y post tax. That’s $942 income a week. If you save 30%, you’ll have $650 a week to live on. Now that’s not a lot, which is why 30% savings is already way better than most twenty somethings.

But, here’s the clincher. You’ll also be saving $14,600 a year.

And this is where compound investing and youth make magic together. $14,600 invested, with a regular investment of $280 a week (your savings) gets you to $255,000 after 10 years. That’s with an annual compound return of 8%, which is less than the long term stock market and real estate return in Australia. We’ll talk about what it means to invest and get 8% annualise returns below.

In the meantime, let me shout it from the rafters – saving is massive part of being financially successful in your 20s. If you want to start your 30s with a net worth of a quarter of a million bucks, we’ve just shown you how.

Saving tips

To master saving you need to learn how to budget and practice delayed gratification. This is tough, when it seems like your besties are out splurging all of their disposable income (because they probably are!). Saving is about trade offs. Every dollar adds up and everything you don’t buy now will get your closer to financial security and if you want it, financial freedom.

  1. If you can’t afford to buy it outright, don’t buy it.
  2. Budget your online streaming, food delivery and ride sharing expenses – young Aussie millennials are spending way more on these things than they realise.
  3. Put your savings somewhere you can’t get to them easily.
  4. If you have to use credit, pay it all off in the interest free period. No exceptions.
  5. Use your online bank app to track income and expenses and manage your money.
  6. Under no circumstances should you be tempted to upgrade your lifestyle as your income grows. Keep it humble,

If there was a silver lining to the whole damn lockdown situation it is that we’re saving a lot more of our money. If that’s you, don’t be tempted to spend up big when restrictions ease! Invest that money instead.

Step 4 – Start regular investing in real assets

If you’ve invested time in your financial education, then you should have an understanding by now about assets and liabilities and how to use them to build wealth.

Your mission, in the game of money, is to accumulate assets and avoid liabilities. The younger you start, the greater the compounding benefits you receive. Huzzah!

Investments are only assets if they put money in your pocket each month. These are not easy to find or build – if they were everyone would buy them. You have to be creative. Here’s some investment classes you might think about that can put money in your pocket each month depending on what and when you buy. Some will get you more than an 8% annualised return (with more risk), some less. The lower down the list, the more capital you’ll need to get started. You may get to property investing by the end of your 20s, if you’re super disciplined with saving and investing.

  1. Bitcoin, Ethereum or other cryptocurrency with demonstrated real world use cases
  2. Digital assets – building, buying, renovating selling them
  3. Dividend stocks
  4. Exchange Traded Funds
  5. Investment properties

Consider dollar cost averaging in to your investments if you don’t have much in the way of savings to start. A regular investment will smooth out price bumps and also help you take full advantage of compounding over time.

Our Ms Mogul blog features a bunch of posts to to help get your head around the crypto asset class as well as the best resources to get you started in cryptocurrency.

When you get the capital behind you, think about buying an investment property before buying your own home. Also, think about buying a cheap home and doing it up while you live in it. These are all strategies we’ve used to build wealth and keep more of the money we make. If you want to know about our specific investment property strategy to build wealth and rental income, you can read all about it here.

Step 5 – Crush your credit score

Once you’ve built up enough capital you’ll probably want to leverage good debt to invest and build wealth, for example by buying investment properties. To do this, you’re going to need a good credit score.

Makes sense right? You need to demonstrate that you are financially responsible before lending institutions will lend to you. So what’s a good credit score and how do you go about getting one?

If you’re in the US, you’ll probably have a FICO score. The Australian system uses similar ratings to FICO, which are:

  • 800 and above — Excellent
  • 740-799 — Very good
  • 670-739 — Good
  • 580-669 — Fair
  • Below 580 — Poor

To borrow money for investments, you’re aiming for a rating of ‘Good’ or above.

Credit score tips

  1. Open a savings or checking account – most will already have this, but if not it’s way past time
  2. Establish a steady income paid into your bank account
  3. Put some bills in your name and pay those bills in full, on time.
  4. Get a low limit, low interest credit card and pay it down each month
  5. Don’t use all of the available credit on your credit card. Stick to less than 50%.
  6. Check your credit history and credit score once a year.

The final word – here’s to your financial success twenty-somethings!

So here’s what we would do if we had our time again, to be financially successful in our 20s:

  1. Become top 5% financially literate among peers
  2. Build multiple income streams – get an internet side hustle
  3. Save at least 30% of your income and don’t spend more as you make more
  4. Dollar cost average invest your savings aiming for 8% compound returns at least
  5. Pay your bills and your credit card each month and check your credit score annually

This my millennial co-conspirators in wealth is what financial success looks like in your 20s if you want to be financially secure in your 30s. If you want financial freedom, then your mission doesn’t end here. Take a look at this post to help you free your 30-something self. Here’s the good news for you – because you started in your 20s and are ahead of the game, skip straight to step 9. It’s time to put the pedal to the metal and win back your life.

Til next time, have fun, be happy and do good!

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