Saving money is important at any age, but the way that you should save differs greatly from one decade to another. That’s because changes in your income and new expenses affect your ability to save and might even change your motivation to do so. With each change in your lifestyle comes new financial needs — and one of the biggest transitional times in your life is entering your third decade of life. Saving money differs significantly in your 20s and 30s, so here are a few saving tips for young adults.

In your 20s, you’re adjusting to life in the “real world.” You’re probably earning an entry-level salary, living on your own or with roommates, and paying bills without assistance from mommy and daddy. Saving probably isn’t as important to you as experiencing life and having fun. In your 30s, you’re more settled in life.

You might be married or are seriously thinking about it. You might have a mortgage already — or are considering buying a home. You may have even started a family already or are thinking about doing so. With such serious differences in lifestyle between your 20s and 30s, you can’t and shouldn’t save the same way. Here are a few tips on how you should save for each of these crucial decades.

In your 20s…

1. Establish a budget.

As much as you were told to budget in college, it’s understandable — expected even — if you didn’t do so. But now that you’re actually earning a decent income, you’ve got to figure out how to slice up your budget. There are bills you have to pay, an emergency fund you have to build, and weekly expenses like food and gas. Of course, there will be room for discretionary spending, but without establishing a budget, you might be wasting more money than you can afford.

2. Build an emergency fund.

Seriously, you need a rainy day fund, or you’ll end up having to turn to your parents for help, and they may or may not be willing to bail you out. That’s an unhealthy habit to develop, so start contributing some money to a rainy day fund. You’ll need it if your roommate moves out your apartment and you have to move to a new place (those deposits aren’t cheap) or your car breaks down. You should aim to save at least 10 percent of each paycheck until you have about three to six months of your expenses saved.

3. Contribute to a 401(k).

You should at least contribute as much as it takes for your employer to match. Ideally, you should be aiming to save 10-15 percent of your income. But really, in your early 20s how much you save for retirement isn’t as important as actually saving for it. By establishing good savings habits early, you will be laying the groundwork for a solid financial future.

4. Have a plan to repay your debt.

Your debt might exceed your yearly income in your 20s. It’s easy to think of your five- or six-figure debt as some abstract number and not feel how much it could weigh you down. That’s a dangerous way to think. Debt is a reality for most young adults. Student loans themselves are enough to weigh you down for several years, but add credit card debt and you could potentially be paying off debt until you die.

You can’t dismiss your debt by resigning yourself to the fact that it will always be there, so why not just pay the minimum due. You need to be aggressive about paying your debt down. For your student loans, you might even consider a loan forgiveness or repayment plan. For your credit card, you need to be careful about not letting your debt spiral out of control. You have to rein in your spending and live within your means. If you find your debt spiraling out of control, you can use strategies to pay it down.

5. Develop your marketable skills.

Unless you’re incredibly lucky, you won’t land your dream job after college or even a few years after you’ve graduated. Millennials tend to switch jobs frequently to find the right workplace for them. With each job, you’re hopefully picking up new job skills, but you should also try to make yourself more marketable by asking to take on new and different responsibilities at each job. Picking up more skills will improve your ability to land better jobs. Learning doesn’t stop just because you’re done with school.

In your 30s…

6. Readjust your budget.

You can’t save the same way you did in yours 20s. You should be earning more money, and if you followed the key advice about saving money in your 20s, you should have a fair amount saved. But your needs in your third decade are decidedly more different than they were in your 20s.

You will need to readjust your budget after major life changes like getting married, having kids, buying a home. In your 30s you should have more money and different financial goals, so you’ll have to slice up your budget in a different way. You might need to cut back your discretionary spending and use that money elsewhere. You might need to use your pay raise and allocate it to your new home. According to the National Association of Realtors, the median age of a first-time home buyer is 31. That’s likely the biggest expense you’ll ever undertake, so it’s time to look at your budget and adjust.

Whatever the case may be, you can’t spend or budget the same way you did in your 20s now that you’re older.

7. Increase your savings.

You’re earning more, so you should be saving more. That means you should contribute more to your emergency fund. One way to increase your savings is to make it work harder for you. That means you should take action to earn interest on your savings.

In your 20s, you might not have thought about investing or ways to grow your savings, so you parked your money in a traditional savings account. But there are better ways to make that money work for you. Parking your money in an online savings account, a money market account, or a high-yield checking account will help you accrue interest on your savings. Shop around for the best savings rates.

If you can tie up your money for a few months, you might consider a Certificate of Deposit to earn higher interest on your money. Savings bonds are another investment you might consider if you can tie your money up for a period of time. Whichever way you choose to grow your emergency fund, it’s imperative that you take action now and let your money work for you.

8. Save more for retirement.

Yes, retirement is still a ways off, but now that you’re making more money, you need to contribute more too. You might have started saving just 3 percent of your paycheck in your 20s or enough to earn your employer’s 401(k) match. That made sense at the time because you were focused on paying debts and ironing out your financial situation.

Now, you should aim to save at least 15 percent of your income for retirement. And with each pay raise you receive, you should increase your contributions. If you don’t save enough for retirement now, you risk going broke.

9. Pay off your debt (minus your mortgage).

Because you’re a smart person, you developed a debt repayment plan in your 20s. Hopefully, you’ve been sticking to it faithfully because now that you’re in your third decade you’ll have a host of new expenses to think about if you decide to buy a home, get a new car, or have kids. All of these major life decisions will add more debt to your life. So you’ve got to continue paying off your student loan and credit card debt so that you can focus more on retirement in your 40s.

10. Advance your career.

In your 20s, you focused on getting experience and developing your skills set. Now that you’ve acquired different skills through all the jobs you’ve held, it’s time to reach your earnings potential. Are you happy with your job? If not, it’s time to move on before you end up getting stuck. Which career path do you want to pursue? Which types of jobs might be the best fit for you? Before you end up in a job that drives you crazy, make the switch now. Yes, it’s risky. But that’s why you have an emergency fund, right? And a financial plan in mind as well, right? If you’re happy where you are, evaluate your skills and position. Could you be doing more to help yourself move up the company ladder.

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  • j. loewen

    Basic common sense. I didn’t do most of the 20’s stuff because my income was really low. By 30 I really got into them and wound up in retirement comfortable if not rich. Love those Vanguard Mutual low cost funds.

  • Mauricio Morgan

    emergency fund and 401K are the most important in my opinion. It sets the table for your future!