The concept of net worth doesn’t even cross many 20 somethings’ mind. If you are a 20 something, you might not know how to manage your finances, or maybe you are just getting started, which is fine.

The 20s are one of the most exciting periods in your life. You are out of college and into the real world. You are living alone, working your first or second job, managing your health, and wondering how to deal with various sudden expenses.

Financial management can get overwhelming, and so it may take you some time before you get financially responsible and start considering building your net worth.

Your net worth is all that is left after subtracting the value of your liabilities from your assets. The earlier you begin working on your net worth, the better it gets for you in the long run.

5 things to do to stay financially sound in your 20s

  1. Focus on your career before anything else

Understandably, you want a well-paying job doing something you love. But getting such a job is not easy. If you are stuck in a job you don’t love, make efforts to switch to your desired industry; finding a mentor is a good start.

Once you are in the industry and the job you are good at, work won’t feel like work as you’ll be a natural there. Your work will get attention in time, and the increments, bonuses, and promotions will soon find their way to you.

You can also work on upgrading your skills by taking online courses about your industry. Upgrading your skills will help you get better companies and better jobs. If you are short of cash in taking up an online course, quick loans could help with that.

Being in a well-paying job in the industry you love is the first step towards being financially sound.

  1. Keep away from high-interest debts

Young individuals in their 20s are prone to taking on high-interest debts. While most of us try to manage our money effectively, some tend to take up loans with high interest without even knowing. Common examples include credit cards, small loan apps, education loans, etc.

If you graduate with an education loan, you would have to spend the first few years paying it off. While an education loan is not something you can avoid, you can prevent unsecured personal loans and credit cards. Credit cards are a costly way to borrow money. The average interest APR charged on credit cards can be as much as 40%.

If you fail to pay your credit card bills on the due date, you can get trapped in high-interest debt. You must avail of such loans only when there is no option left for you.

  1. Budget your income

Most people despise creating a budget. It may be because budgeting limits the amount of money you can spend. While creating and following your monthly budget can be challenging, remember that it is a classic formula to save money.

A budget is supposed to help you save a considerable amount of money every month without compromising your needs and wants.

Efficient budgeting tracks every rupee you earn. Once you build the habit of tracking your expenses, which can be your daily living expenses, rent, loans from quick loan apps, EMIs, etc. and total income, you’ll know that path your money is taking every month. The information helps you cut down on unnecessary expenses and save. And it is simple, the more you save, the higher your net worth gets.

  1. Start building an emergency fund

During your childhood, you were taught the importance of saving for an emergency. It is essential because you can never predict a crisis. And when it strikes, having an adequate sum of money to overcome it can be life-saving.

Try your best to keep away from debt. Availing of quick loans from loan apps is fine, but they must be your last resort. Instead, build an emergency fund amounting to 6 months of your salary. In this way, you will be prepared not just to face an emergency but also to avoid debt.

  1. Start building up your retirement fund

Many of us feel that monthly contributions made towards PPF or EPF accounts from our salaries are sufficient for retirement. But that is not true.

You must invest your hard-earned money in high-yield assets to be left with a substantial retirement corpus for yourself in your retirement. Another important thing is that most of us fail to correctly estimate how extensive a retirement corpus must be as we tend to underestimate the increase in inflation by the time we retire.

You can take help from a financial planner, but you must start building your retirement corpus efficiently right from your 20s.


Unless you generate a significant quantity of wealth in your 20s, your net worth won’t increase if you don’t do anything to boost it. The tips mentioned above can be your starting point to gain financial independence. Always remember to progress in your career, save as much as you can, and take out a loan only in an emergency.