6 Steps to Help You Take Control of Your Finances as a Twentysomething

How to Take Control of Your Finances as a Twentysomething | The Sophisticated Gal
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One of the hardest lessons I had to learn after graduating college was how to manage my finances. It isn’t exactly something that is taught in college, but if they offered a “Personal Finance 101” course – I definitely would have benefited from it. The position I am in now is a much healthier relationship with money after learning how to be smart about my finances. It has helped me so much and has even helped me get to a point where my student loans will be paid off this year.

If you are struggling with your finances or are looking for some tips for how you can take back control of your finances, then you’ve come to the right place. I’m sharing the steps I took to get my finances in check and make managing money a lot less scary.

#1 Come Up with a Realistic Budget

I unfortunately had to learn this one the hard way. I would spend spend spend but wouldn’t really think about how much money I was actually spending. Until one day, I noticed that my account balance was really low and I realized I almost didn’t have enough money to pay for my monthly bills. When I graduated and started making money, I was so proud of having a “big girl” job and thought that spending my money was totally fine but you really need to be careful!

Creating a realistic budget for yourself is so important so you can take control of your finances early on in your twenties. It’s something I wish I would have learned even in college but you live & you learn, right?! When coming up with your budget, step number one should always be figuring out exactly how much income you’re bringing in each month. Don’t focus so much on your “yearly salary” because honestly we don’t take home all of that money anyways. Instead, look at the past few months of paychecks you’ve gotten and see how much income you generally make in a month.

Once you have established your monthly income, it’s time to evaluate your monthly essential expenses (rent, student loans, credit cards, internet, etc) as well as maybe your “non-essential” monthly expenses (gym membership, Netflix, etc). Knowing how much you have to pay for your expenses is so important; especially because you need to make sure that these are not more than your income. If your monthly expenses are really high, it is a good time to see what from your “non-essential” expenses you can maybe get rid of or get a lower payment.

#2 Review Your Student Loans (If You Have Them)

If you have student loans, take time to create a spreadsheet for yourself so you know: the total debt you have, monthly payments you make and monthly/yearly totals. I have kept a spreadsheet for myself since I started paying back my loans and it has been immensely helpful, so believe me when I say creating a spreadsheet is a lifesaver!

If your goal is to pay off your student loans as soon as possible, it is good to see if you have room in your budget to contribute more than the monthly payment on your loans – this will help you pay them down faster! If you need to reduce your monthly expenses (like rent) so you can pay off your student loans faster, consider moving in with your parents for a year or two to help you get ahead on your loans. Living with your parents is nothing to be ashamed of and in fact, is a very smart move and really helped me pay off my student loans faster.

Get access to the FREE Student Loan Tracker spreadsheet by signing up for my mailing list here

#3 Consider Loan Consolidation

If you have multiple loans for your student loans, credit card debt, etc. – it may be a good option to consolidate your loans. When I consolidated my student loans, not only did it reduce the amount of places I was paying a bill to every month but it also helped me save immensely in interest. Earnest offers both student loan consolidation and personal loan consolidations, if you are looking to consolidate your credit card debt or another personal loan – taking out a personal loan might make sense.

When deciding if loan consolidation is right for you, make sure you are comparing your current interest rate and the monthly payment to ensure that you will be able to afford the new monthly payment if you did consolidate.

#4 Improve Your Credit Score

Learning about credit scores, especially after getting turned down for credit cards after I graduated was really hard for me. I had crappy credit when I first graduated and was trying so hard to get a credit card without having a cosigner. Your credit score is one of the most important things you should work on in your twenties, especially if you are looking to consolidate your student loans, purchase a house and more. Your credit score plays a big role in getting loans when you need them, so you should always be looking to improve your credit score.

One of my favorite tools to use for monitoring my credit score is Credit Karma. It’s 100% free and it gives you updates on your credit score. You are allowed to check your credit score as much as you want without it hurting your credit so signing up for Credit Karma is so helpful when you’re trying to improve your credit score.

#5 Invest in Your 401k

I know it probably feels like retirement is light-years away, but honestly the earlier you start saving for retirement – the better off you’ll be! A trick I learned early that was so helpful was to set up your 401k with your company before you get your first paycheck. This way, it’ll be like you never saw that “extra” money in your paycheck and you are already putting away money for retirement! Most companies offer a 401k-match program, so it is basically FREE money that your employer will give you towards your retirement. If your company offers this, make sure that you’re taking advantage of it and getting that extra money for your 401k!

#6 Save, save save

Last but certainly not least, SAVE SAVE SAVE!! You should always have a rainy day savings just in case something happens to your car, house, etc. that you need to pay for right away. Believe me, you will feel much better having this extra cushion for emergencies than not having it in your bank account.

If you are lucky enough to not have student loans, it may also be a good option to start an investment account that will let you grow your money – something through Vanguard, Fidelity, etc.

Save for Later: 

How to Take Control of Your Finances in Your Twenties | Finance Tips | Millennials | The Sophisticated Gal

If you follow all of these steps, then you are well on your way to being a total #bossbabe that is 100% in control of her finances! It’s something that many of us should strive to do this year and always.

What steps have you taken to help you get in control of your finances? Let me know in the comments below!

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    1. Thanks Noelle, so glad you enjoyed reading it! Definitely continue to work on your credit score, because it can take a while to improve the score! Believe me, I’ve been there 🙂 You got this girl!

  1. Lovee this post, and definitely going to try the spreadsheet for my students loans, I think is one of the only things I don’t have from this list. And the tip for the 401k it’s definitely true and efficient.
    If you don’t see the money you don’t miss the money!

    Thanks for sharing-

    1. Thanks Ams, I’m so happy this was useful! I have been using the spreadsheet myself for my student loans since I graduated, it is so helpful to keep track of my student loans and how far I’ve come!

  2. These are all such important thing to remember and work on! I’ve been hard at work to get and continue to keep a really high credit score and to pay down my student loans. I was looking at my account for it the other day and it’s so crazy how much I’ve already paid…but have so far to go haha! This year I’m definitely focusing on paying as much of it down as I can, eliminating ALL other debts, and working on saving & putting into my 401K or a Roth IRA

    1. That’s amazing Kristen! Just keep paying down your loans and eventually they’ll all be done 🙂 I love your goals for this year, you’re gonna do great girl 🙂

    1. Helen, I’m so happy to hear that taking control of your finances is one of your goals this year! Just focus on these tips and you’ll do great 🙂

    1. That’s great Rebecca! It’s always good to have a budget, especially when you’re officially living on your own 🙂 I’ll definitely check out your post on creating a budget!

  3. A student loan is not an issue where I live since it’s free, so I can say I never had to worry about that. What really helped me was creating an Excel budget and sticking to it.

    1. That’s awesome Cristina that student loans aren’t an issue where you live! It definitely helps to have a budget though 🙂

  4. These tips are all so great! Especially coming up with a realistic budget, which is easier said than done sometimes, but so important to get under control! Thanks for the awesome post!

    1. Thanks Kate! I’m so glad you found this useful and I hope you’re able to create a realistic budget 🙂 It’s super important to have your budget under control and just know where your money is going!

  5. These are some great tips and goals, Kristen! My blog specializes in frugal living for Millennial women so I actually created an e-book and budget template for exactly this purpose! I used these strategies and tricks to pay off my student loans, reduce my spending and save for a downpayment on my first house (all on a very modest income!) If you’re interested you can check it out here: https://www.thepennywiseplaybook.com/the-pennywise-playbook-jump-start/ 😊

    1. Consolidating my loans has been SO helpful for me to pay down my loans faster! If you have loans with really high interest rates, it’s a good option to look into 🙂

  6. Yes to all of this! Especially setting realistic goals! When I first set m budget, I drastically cut my grocery bill, and literally could not do it. So I took a good look at what and where I was spending my money, adjusted some things and now I save the same amount, but from across multiple areas.

    1. Thanks Cameron, so glad you enjoyed reading this! I ran into the same situation when I first created a budget, it was totally unrealistic and I couldn’t stick to it. I love that you adjusted yours and spread it out across multiple areas 🙂

  7. All of this. Thanks so much for this advice. I am still in school, but even now I’m trying to figure out how to manage my finances responsibly. I think my first step for now is setting up a realistic budget, so this was my sign.

    1. I’m so happy this post was helpful for you Leighann! I wish you the best of luck with setting up your budget and giving yourself some financial goals this year 🙂

  8. All such good reminders! Especially for someone over here who is notoriously not the best saver. I really like that you specifically said to create a realistic budget. I’m very much of the mindset that you can still have a life and spend money, but still save. It’s all about finding that balance and being realistic! 🙂

    Andrea | https://www.hustleandhearts.com/

    1. Thanks Andrea! Having a realistic budget has been so helpful, so that is always a great first step 🙂 Balance is key as well, you still have to LIVE and have fun!

    1. Love that idea! I do automatic withdrawals as well and it helps so much! I’m happy to hear that you’re going to be focusing on tracking your expenses and honing in on your budget 🙂

  9. This is SO incredibly helpful and important to read! Such a great set of tips – 401ks are sooo important to start ASAP with!

  10. Oooh girl yes! I really struggled to keep a realistic budget when I first got a full time job. It’s hard to know how much you’ll really need to budget at first, and being in a new city, making new friends, trying new foods – it led to a lot of overspending on my part! I’ve gotten a much better hold on it, and I’m definitely able to save a lot more now than before!!

    I definitely need to look into debt consolidation. I’m current;y paying a lot of different entities and making one payment would help SO much. Interest charges can be a real beast, and sometimes I feel like I’m not even making a dent in my debt reduction because of it!

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