We receive advertising fees from the brands we review that affect the ranking and scoring of such brands.
Advertiser Disclosure

Building Wealth Early: How to Save Smartly Before Hitting 25

Shirel Berchowitz Updated: February 28, 2024 • 5 min read
Young woman sitting at cafe

Key Points:

  • Starting to save early in life is a cornerstone of long-term financial stability and security.

  • 41% of young adults have less than $500 in savings, while 60% struggle to cover unexpected expenses.

  • This article aims to guide young adults, particularly those around 25, on how much they should ideally have saved. 

Starting to save early in life is not just a wise financial decision; it's a cornerstone of long-term financial stability and security. A survey conducted by the National Financial Educators Council (NFEC) showed that 41% of young adults have less than $500 in savings, while 60% struggle to cover unexpected expenses. By understanding the importance of accumulating savings at a young age, individuals can set the foundation for a prosperous future free from the constraints of financial uncertainty. This article aims to guide young adults, particularly those around 25, on how much they should ideally have saved. 

Starting to save early in life is a powerful strategy that sets the foundation for a secure financial future.

Why You Should Start Saving Early?

Starting to save early in life is a powerful strategy that sets the foundation for a secure financial future. The benefits of early savings are profound and multifaceted, encompassing everything from the marvels of compound interest to the peace of mind that comes with financial security.

Compound Interest: Often hailed as one of the most potent forces in finance, compound interest allows your savings to grow exponentially over time. The earlier you start saving, the more time your money has to earn interest, then earn interest on that interest, and so on. This effect can turn even modest savings into significant sums over the long term, making early saving a crucial step for anyone looking to build wealth.

Financial Security: Early savers are better prepared for life's unexpected turns. Having a financial cushion means handling emergencies without derailing your financial stability, reducing the need to rely on high-interest debt options like credit cards or loans.

Reduced Financial Stress: Knowing you have savings to fall back on can significantly reduce anxiety about money. This peace of mind is invaluable, allowing you to focus more on your life and less on financial worries.

Achieving Future Financial Goals: Whether your dreams include buying a home, investing in the stock market, or traveling the world, starting to save early gives you a head start. With a solid financial base, you're better positioned to pursue these goals, making them dreams and achievable realities.

In essence, starting to save early is not just about accumulating money; it's about building a foundation for a secure, stress-free, and fulfilling future.

Top Savings Account Providers

Quontic Online Bank Logo
Quontic Banking
  • No monthly/overdraft fees
  • Low minimum deposits
Visit Site
Patriot Bank Logo
Patriot Bank
  • Enjoy a 0.70% APY high-yield
  • Personalized products for your goals
Visit Site
Axos Bank
  • Earn up to 0.61% APY
  • Up to $200 Bonus for High-Yield Savings
Visit Site

How Much Money Should I Have Saved by 25?

By age 25, setting clear financial goals and benchmarks for savings is crucial for building a secure financial future. While individual circumstances vary, adhering to general savings guidelines can provide a solid foundation for financial health.

General Savings Guidelines: A widely recommended goal is saving at least six months of living expenses. This fund acts as a financial buffer, helping you navigate unexpected events such as job loss, medical emergencies, or urgent home repairs without falling into debt. For many, achieving this may seem daunting, but starting small and consistently saving a portion of your income can gradually build this essential safety net.

Retirement Savings: The importance of early retirement savings cannot be overstated. Beginning in your early 20s, aim to save at least 15% of your income towards retirement. This includes contributions to employer-sponsored retirement plans like a 401(k) and individual retirement accounts (IRAs). Starting early takes advantage of compound interest, significantly increasing your retirement fund. If 15% is not immediately feasible, contribute as much as possible and increase the percentage as your financial situation improves.

Emergency Fund: Beyond general savings, establishing an emergency fund is paramount. Ideally, this fund should cover three to six months of expenses, separate from your general savings. This ensures immediate access to funds in unforeseen circumstances, providing additional financial security.

By the age of 25, clearly understanding these savings benchmarks and working towards them can set the stage for financial independence and security. It's about creating a habit of saving, regardless of the amount, and gradually increasing it as your financial situation allows. Remember, the goal is to build a stable financial foundation supporting you through various life stages.

Personal Finance Related Articles

Factors Influencing Savings at 25 

At 25, the ability to save money is influenced by various factors, each playing a significant role in shaping one's financial landscape.

  • Income Levels: Naturally, income levels directly impact the ability to save. Higher incomes potentially allow for more substantial savings after essential expenses are covered. Conversely, those with lower incomes may find it challenging to save, as necessities consume a larger portion of their earnings.
  • Living Expenses: Budgeting for living expenses such as rent, utilities, groceries, and other essentials is crucial. In areas with a high cost of living, these expenses can consume a significant portion of one's income, leaving less room for savings. Effective budgeting and cost-cutting measures can help manage these expenses, freeing up funds for savings.
  • Debt: Student loans, credit cards, and other forms of debt can severely limit the ability to save. Monthly debt payments can take a substantial bite out of one's income, especially if the debt carries high interest rates. Prioritizing debt repayment can help free up more money for savings over time.
  • Lifestyle Choices: The impact of lifestyle choices on savings cannot be overstated. Frequent dining out, entertainment, and travel can quickly erode one's savings ability. Adopting a more frugal lifestyle, prioritizing spending, and finding cost-effective alternatives for leisure activities can significantly enhance savings potential.

Understanding and navigating these factors effectively can help individuals at 25 set realistic savings goals and develop strategies to achieve them despite their financial challenges.

Strategies for Boosting Your Savings

Budgeting: The cornerstone of effective savings is a solid budget. Start by tracking your income and expenses to understand where your money goes. Use budgeting apps or spreadsheets to categorize spending and identify areas for reduction. Setting clear financial goals can help prioritize spending and savings.

50/30/20 calculator

Monthly after-tax income






Savings and Debt Repayment


Cutting Expenses: Review your monthly expenses to find areas to cut back. Consider switching to more affordable service alternatives like phone plans, subscriptions, and utilities. Cooking at home more often, limiting discretionary spending, and using public transportation can significantly reduce monthly expenses.

Increasing Income: Boosting your income can accelerate savings. Look for side hustles that match your skills and interests, such as freelancing, tutoring, or selling handmade goods. Don't hesitate to negotiate a raise at your current job or seek higher-paying opportunities elsewhere.

Investing: Investing can help grow your savings faster than traditional savings accounts. Start with low-cost index funds or robo-advisors if you're new to investing. Always research or consult a financial advisor to understand your situation's risks and best strategies.


This article has explored the importance of saving early, factors affecting savings at 25, how much to aim for, and strategies to boost your savings. Remember, it's never too late to start saving. Begin with what you can focus on building healthy financial habits and gradually increase your savings rate. Set clear, achievable goals and work steadily towards them. Your future self will thank you for the financial security and freedom you're working towards today.



Is it too late to start saving at 25?

Absolutely not. Starting to save at 25 still gives you the advantage of time, especially when it comes to compound interest.

Should I focus on paying off debt or saving?

A balanced approach is key. Prioritize high-interest debt but also save a small amount to build an emergency fund.

How can I save money while still enjoying my youth?

Set aside a budget for entertainment and leisure. Look for free or low-cost activities and prioritize experiences over material goods.

Is 100k saved by 25 good?

Having $100,000 saved by 25 is an impressive financial achievement. It significantly surpasses the average savings amount for most individuals in that age group, indicating a strong commitment to financial discipline, saving, and possibly investing.