What To Do With Your Money In Your 20s, 30s, And 40s – Ideas From Generation Earn

Most of us don’t move through life in pre-determined stages, but there are still some generalizations we can make about money and age. These ideas for what to do with your money in your 20s, 30s, and 40s come from my new book, Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back, which was just published by Ten Speed Press.

In your 20’s:

Invest in your career. Your career is the one place where it makes sense to splurge.  This might mean investing in the services of a career coach, or taking a leadership development class.  It could mean something as seemingly superficial as working with a personal shopper to make sure your wardrobe helps you look and feel good at work.  Or perhaps purchasing some guide books about your chosen field.  Investing in your career now, when you have time, can pay off hugely later.

Start saving in small ways. While we need to eventually aim to save one-third of our income for retirement, long and short term goals, and emergencies, it’s almost impossible to do this when you’re still getting your feet on the ground.  That’s why it makes sense to start small, by saving two percent a year, and then slowly raising that to four percent and beyond.

In your 30’s:

Support your family. Many people opt to settle down and even expand their families at this stage.  Money doesn’t guide these decisions (if it did, we’d probably never have kids), but some advance planning can make the transition to parenthood easier.  Save up a baby fund before welcoming the new arrival and if you plan to make do on one salary, practice living on it — and only it — during pregnancy.  Put the savings into the baby fund.

Write your own homeownership rules. Research shows that homeowners tend to be heavier and less happy than renters.  Combine that with the fact that housing values haven’t been steadily climbing in recent years (far from it), and you might want to resist some of the pressure to buy a house of your own.  Renters don’t have to rake leaves, pay for flooding damage, or worry about property taxes.

Embrace the new (and old) home economics. As you’re developing your domestic routine, consider welcoming some influence from our grandparents’ generation.  They made most of their own meals, cut their own hair, walked or biked instead of driving when they could, and embraced DIY projects as a way of life.

In your 40’s:

Give back to the causes that are important to you. It’s time to start thinking about your legacy.  What impact do you want to have on people?  How do you want to be remembered?  You’re not going anywhere yet, but it’s time to start thinking about what difference you want to make.  It can start with supporting (or avoiding) certain companies in your shopping and investment habits, but also encompass giving to charities and even starting your own nonprofit.

If you’re wondering how to get started, check out the unmet needs in your community.  Who needs help?  Or, look outside your neighborhood: What global issues in the news catch your eye?  Is there an area that intrigues you so much that you’d like to get involved?

For more information, visit Kim’s website at www.generationearn.com. She also writes the Alpha Consumer blog (www.usnews.com/alpha) at USNews.com.

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Published or updated May 11, 2013.


  1. Can I add 2 more to the 20’s?
    1) Pay off student loans
    2) Consider living with roommates or parents to save money

    Those are my two.

    • You most definitely can add!

      I think with student loans you certainly want to get rid of high-interest private loans. The low interest ones are great to pay off but if you have other debts or expenses to cover I think the loans can wait (just my opinion).

      I moved back with my folks at one point that was got me over the hump in paying off my credit card debt!

  2. Chris Gagner @ SmartPF.com says:

    The twenties would be a great time to start saving for retirement. 1/3 of your income wouldn’t be required if you started earlier. Also, becoming debt free as early as possible would be helpful.

  3. I think that in your 20s, it’s actually easier to save. When I say that, I mean that it’s easier to increase your net worth. You’re used to living like a college kid, so don’t go overboard. Take 20% of your salary and pretend you don’t have it. Try living on the rest and you’ll be rewarded down the road.

    • Agreed. At that age every raise for me seemed to go into raising my style of living. If I had cut back just a little and banked some of those raises I’d have a nice sum to sit on.

  4. I agree with these comments too! I love the idea of living with your parents… it can save both of you money. I have a whole chapter on that!

  5. I like the list. They say that your 40’s and 50’s are your peak earning years so you can actually save the most during those times.

What Do You Think?