How to do financial planning in your early 20s?

With the financial up and down in an individual’s life, it is solely important to do the right financial planning that would support as a walking stick in his/her hard times.

Better early money planning make you financially free in your mid-age. It helps you fulfill your dreams, overcome bad fortune, fight inflation, etc.

But how to make early and right planning regarding your finance. What to do and what to not, How and where to Invest. We are here to cover all of these in this post.

Do and Don’ts in your 20’s

First of all building healthy spending habits means you should know the value of money and spend it wisely. Generally youth at their starting 20’s waste money like water.

Avoid taking loans unless super necessary especially at your twenties. Whenever you take loans, you get bound in a way.

Education and health loans can be considered at some point as it is a human investment. But never take personal loans, loans for a car, for a house or other big stuff at your twenties.

This is because, in your twenties, which is basically a struggling period for the majority, no one expects you to be rich, to have your own car or house. It is ok not to have your own car or house at your starting twenties. It’s ok not to go to luxurious restaurants with your friends and chill out.

If you are taking education, please take it in your own head instead of your parents. Good thing is that education loans come at low-interest rates.

The funda is quite clear, avoid taking any loans, reduce your expense to get luxurious moments, and invest that saving. Definitely, you will find yourself financially free after some time as compared with your friends who spend money on non-necessary things and do not invest.

How to Invest in your 20’s

The sooner you would Invest, the better for you. The 20s is one of the best eras of your life to invest. During this period of time, a person has comparatively fewer financial responsibilities. This is the time for any person to learn the value of money and its earning way. Know about Investment.

If you would invest in your 20s, definitely you would see its results in your coming 30s and would feel comparatively more financially free. Here we are going to give you some of the best ways to invest in your 20s.

Investment in Education

Some of you might think that, oh this is not a money-making investment. But believe education is one of the best investments in your 20s. Invest in higher education, and learn some cutting-edge skills.

Skilled knowledge eventually brings money. It is the base on which 30 to 40 years of your professional life depend. These days people are making millions from their knowledge and skills either working for someone or freelancing.


Insurance is the type of Investment that gives you a return at your bad times. It is actually a plan for something that is unseen.

Any bad thing can happen in life as life is full of un-expectancy. This is how the life goes. Taking Insurance is actually making you and your family secure financially by Investing some amount regularly.

So there are only two types of Insurance I would recommend you to take at your 20’s, first life Insurance and second health Insurance.

If you are young, which is definitely in your twenties, and don’t have any bad habit, you can easily get term Insurance at a very affordable premium. Know about Insurance.

Money making Investment

When you are in your early twenties, definitely you just enrolled in your job, this means, you are getting lower salary and hence low taxes on it. Some may even out of this tax slab. This means you are getting highest in-hand salary in terms of percentage.

Also, as you are just a beginner, no one is expecting you to have cars, big flats, and live above the normal life. It is ok to look like average in your starting days of earnings. You should take advantage of this and Invest your monthly savings.

Optimal Investment Ratio: Though you can Invest as much as you can, but there is a basic rule in finance. That is, Invest at least 20% of your in-hand monthly salary.

This means, if you are getting $1000 monthly in hand from your job or any Income source, then Invest at least $200 monthly.

Where to Invest in your 20’s

As opposed to old age Investment where an Individuals intention is to conserve money and don’t take any risk of losing money, Investment at youth is comparatively more flexible.

At your early twenties when you have just stepped into the Investment market, you can take the risk. Just keep remembering, more risk is equal to more profit.

At this age you have invested for the next ten to twenty years, you will face various up and down in the market and hence in your money worth too.

The basic rule is that just Invest in something and stick to it. Don’t panic with the current net worth of your asset. It may collapse and rise several times.

In your twenties, I would not recommend you to Invest in Fixed Deposits. Rather I would suggest you to Invest only in Stocks and Bonds. You can also consider cryptocurrency as it is super popular these days. Just keep remembering its volatility.

Stocks: This is a kind of growth-oriented investment where you buy the asset share of an organization whether private or government by paying the amount worth of asset value.

You make a huge profit in your investment if the share of that organization goes high. It also has risk of a reduction in your investment value if the stock prices go down.

Bonds: It is a kind of Fixed-income investment where you invest by lending money to the company or government for a set period of time in exchange for regular interest on the investment.

You earn interest on your investment amount from the first month of issuing and that interest adds to the bond and increases further compounded.Post na