Things You Should Spend Money on in Your 20s | This article will provide the key areas where spending money in your 20s can provide value, from education and experiences to health and relationships. We’ll also break down why each category is worth the investment and how to balance spending with financial discipline. Read through
Your 20s are a defining decade when it comes to your financial habits. The decisions you make now about how to spend your money can either set you up for long-term success or create hurdles that take years to overcome.
Read: Overcoming Financial Burden: Strategies for Personal and Financial Stability
While saving and investing are important, knowing where to spend your money wisely can significantly impact your growth, happiness, and opportunities in the future.
6 Things You Should Spend Money on in Your 20s
Invest in Education and Skill Development
One of the most important investments you can make in your 20s is in your education and skills. While you may have already completed formal schooling, continuous learning is essential in today’s rapidly evolving world.
Spending money to enhance your knowledge and skills will pay off in terms of higher earning potential, career advancement, and job security.
Formal Education and Certifications: Furthering your education through degrees, certifications, or specialized training can provide a competitive edge in the job market.
Whether it’s pursuing a graduate degree or enrolling in a professional certification program (such as project management, coding, or financial analysis), expanding your qualifications can open up more opportunities.
Reasons:
Higher levels of education are often correlated with higher income. For example, a master’s degree can increase your earning potential by providing you with specialized knowledge and skills that are in demand.
Online Courses and Workshops: The rise of digital learning platforms such as Coursera, Udemy, and LinkedIn Learning makes it easy to access a wide range of affordable courses.
These platforms offer courses on everything from business management and coding to creative writing and design.
Reasons:
Online courses allow you to learn at your own pace, often for a fraction of the cost of traditional education. They’re perfect for building skills that can enhance your career or even help you start a side hustle.
Spend on Experiences Rather Than Material Goods
In your 20s, it can be tempting to spend money on clothes, gadgets, and other material possessions. However, research consistently shows that spending money on experiences such as travel, concerts, or social activities—brings more lasting happiness than buying things.
Experiences provide you with memories, personal growth, and a sense of fulfillment that material goods cannot.
Travel and Cultural Experiences : Travel is one of the most enriching experiences you can invest in during your 20s. Whether it’s exploring a different country or taking a weekend trip to a new city, travel broadens your horizons, exposes you to different cultures, and fosters personal growth.
Reasons:
Travel can be life-changing, helping you build independence, gain perspective, and form meaningful connections with people from diverse backgrounds.
It’s also a great way to refresh and recharge, making you more productive and creative when you return to work or daily routines.
Social Activities and Events: Spending money on social experiences like dinners with friends, concerts, festivals, or fitness classes can help build strong relationships and improve your overall well-being.
Reasons:
Good relationships and social experiences are linked to higher levels of happiness and life satisfaction. Spending money on experiences that foster connections with others contributes to emotional health and provides lifelong memories.
Invest in Your Health and Well-being
Good health is invaluable, and the habits you develop in your 20s can have a profound impact on your physical and mental well-being in the long run.
Allocating a portion of your income to maintaining and improving your health is one of the wisest decisions you can make.
Fitness and Exercise: Investing in a gym membership, fitness classes, or even home workout equipment may seem like a significant expense, but the long-term benefits of staying active far outweigh the costs. Regular exercise improves your physical health, reduces stress, and boosts your mental health.
Reasons:
Physical activity reduces the risk of chronic diseases such as heart disease, diabetes, and obesity. In addition, exercise is proven to enhance mood and cognitive function, which can help you perform better in your career.
Healthy Food and Nutrition: It may be tempting to save money by eating cheap, processed food, but investing in high-quality, nutritious food will pay off in terms of better health and energy levels.
Spend money on fresh produce, whole grains, and lean proteins, and avoid the pitfalls of a junk food-heavy diet.
Reasons:
A healthy diet contributes to better physical health, improved mental focus, and increased longevity. The energy you gain from eating well will also make you more productive in both your personal and professional life.
Mental Health and Therapy : If you’re struggling with anxiety, depression, or any other mental health issue, spending money on therapy or counseling can be a game-changer. Taking care of your mental health is just as important as your physical health.
Reasons: Mental health services help you develop coping strategies, enhance emotional resilience, and improve your overall quality of life. Addressing mental health issues early on can prevent larger problems in the future.
Spend on Building Relationships
In your 20s, you’ll likely establish many of the relationships that will last a lifetime. Whether they are friendships, romantic relationships, or professional connections, investing time and money in building strong, meaningful relationships can provide a wealth of social, emotional, and even career-related benefits.
Networking and Professional Relationships: Attending conferences, joining professional organizations, or paying for memberships in networking groups may seem like unnecessary expenses, but these activities can significantly impact your career trajectory.
Reasons:
Building a strong professional network opens the door to job opportunities, mentorship, and career advancement. Networking can help you stay informed about industry trends, meet influential people, and get referrals for new opportunities.
Relationships with Friends and Family: Spending money to nurture relationships with family and friends—whether it’s through hosting gatherings, buying thoughtful gifts, or planning activities—creates deep emotional bonds and a sense of community.
Reasons:
Strong personal relationships provide emotional support, happiness, and a sense of belonging, which are key contributors to overall well-being.
Smart Investments and Savings
While it’s important to spend on experiences and relationships, your 20s are also a prime time to start saving and investing for the future. The earlier you begin, the more time you have to benefit from compound interest and grow your wealth over time.
Retirement Accounts (401(k), IRA) : Contributing to retirement accounts, such as a 401(k) or an IRA, is crucial for long-term financial health.
If your employer offers a 401(k) with matching contributions, make sure to take full advantage of this benefit.
Reasons:
The power of compound interest means that even small contributions in your 20s can grow into substantial amounts by the time you retire.
For example, investing just $200 per month at an average annual return of 7% can grow to over $500,000 in 40 years.
Emergency Fund: An emergency fund should be a priority to cover unexpected expenses like medical bills, car repairs, or job loss. Aim to save at least 3-6 months’ worth of living expenses in a separate, easily accessible account.
Reasons:
An emergency fund protects you from going into debt in case of unforeseen circumstances. It provides peace of mind and financial security, allowing you to focus on long-term goals without the stress of financial emergencies.
Investment in Stocks, Bonds, and Other Assets
In addition to saving for retirement, consider investing in stocks, bonds, or other assets to build wealth over time. If you’re new to investing, start with low-cost index funds or exchange-traded funds (ETFs), which offer diversification and lower risk than individual stocks.
Reasons:
Investing early allows you to take advantage of compound growth. Over decades, even modest investments can grow significantly, providing financial freedom and the ability to achieve larger goals, such as buying a home or starting a business.
Invest in Insurance
Insurance is one of those expenses that may seem unnecessary when you’re young and healthy, but it is critical for protecting your financial future.
Whether it’s health insurance, life insurance, or renter’s insurance, spending on the right coverage ensures that you’re protected in case of emergencies or unexpected events.
Health Insurance : Even if you’re in good health, having health insurance is non-negotiable. Medical bills can be astronomically high without coverage, and a single accident or illness can lead to financial ruin.
Reasons :
Health insurance protects you from unexpected medical expenses and provides access to essential healthcare services. It’s one of the best ways to safeguard both your health and your finances.
Life and Disability Insurance : If you have dependents or significant financial obligations, consider life and disability insurance.
While these policies may not seem necessary in your 20s, having coverage can provide peace of mind knowing that you and your loved ones are protected.
Reasons:
Life and disability insurance provide financial security in the event of an accident, illness, or untimely death. These policies ensure that your family is taken care of and that your financial responsibilities are covered.
Renter’s Insurance : If you’re renting an apartment, renter’s insurance is a must-have. It covers your belongings in case of theft, fire, or other disasters and often includes liability coverage in case someone gets injured in your home.
Reasons:
Renter’s insurance is relatively inexpensive but provides significant coverage in case of an emergency. It ensures that you won’t have to pay out of pocket for replacing lost or damaged possessions.
In Summary:
Your 20s are a time to lay the foundation for your financial future. While it’s important to save and invest, knowing where to spend your money can help you build wealth, improve your quality of life, and create lasting experiences.
By investing in your education, health, relationships, and financial security, you set yourself up for success both now and in the future. Strategic spending in your 20s is about balancing short-term enjoyment with long-term planning, ensuring that you can enjoy life while also preparing for the years ahead.
