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11 Tips for Saving Money in Your 20s

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How you spend your time and money while in your 20s can profoundly affect the rest of your life. It might be hard to imagine far into the future, but frivolous spending now diminishes the cache available for important purchases later. Without a crystal ball, how do you decide what's important to save for and what's not? Cheapism.com identified 11 savings goals for your 20s.

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An emergency or rainy-day fund is often No.1 on experts' lists of savings goals. Aim to accumulate at least three to six months of expenses in a liquid (i.e., readily accessible) account. Unlike the rest of the items discussed here, the savings that go into this pot don't have a specific purpose other than to buffer you in worst-case scenarios. You may need to dip into the fund to pay for medical expenses, a new transmission for your car, or living costs while between jobs. Without a go-to source of money, you may have little choice but to turn to high-interest loans or credit cards.

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This may seem contrary to the advice about setting aside funds for emergencies, but the second smartest savings move is to pay off high-interest debts (those with an annual percentage rate higher than 6 percent). Wiping out your debt essentially yields a rate of return on your money equal to the interest rate you've been paying. For credit cards, this can climb beyond 25 percent. Where else can you earn that kind of return?

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Your next trip may be a weeklong island vacation or a month spent backpacking overseas. No matter the destination, your 20s are prime time for travel. You're less likely to have the kind of responsibilities that keep you tethered to home, so it's relatively easy to pick up and go. Of course, you'll need to save a wad before you take off.

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Whether you want to start or finish a bachelor's degree, pile on a master's or Ph.D., or attend one of the coding schools you've heard so much about, putting aside some money for education is a smart decision. A degree or certificate can pave the way to a new job or career but often requires an upfront and expensive investment that you can make with savings. Less career-oriented courses, such as a cooking or photography class, could set you on an entrepreneurial path and provide years of personal satisfaction.

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Sure, retirement is 40 years out, but starting to save for that inevitable day while you're young is one of the wisest choices you can make. Whether you're contributing to an employer-sponsored retirement plan or decide to open an Individual Retirement Account (IRA), the power of compound interest rewards young investors.

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If you're lucky enough to spend one-third of every day lying on your mattress, you should definitely save up to buy a good one. Don't confuse price with quality, though, because mattresses easily run into the thousands without offering more than marketing fluff. Take your pick from dozens of models and styles available from bricks-and-mortar and online vendors.

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When you're not sleeping, you're probably wearing shoes, so do your body a favor and buy a few good pairs. No matter whether you work on your feet or at a desk, add to your wardrobe at least one good pair for work and another for physical activity. The shoes will last longer and wear better than any you pick up at a discount outlet, and your knees and back will thank you later.

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Even if you haven't met "the one" yet, odds are you'll be married soon. Men often marry later than women, but U.S. census data show that the median age of marriage for both sexes is younger than 30. Keep in mind that the median cost of a wedding is nearly $20,000, so it makes sense to start saving up for something that's statistically in your near future.

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The word "conference" might bring to mind dreaded thoughts of work, but let it go. Instead, conjure thoughts of saving up to attend the next TED Conference, World Business Forum, Vanity Fair Summit, or SXSW. If something more free-flowing better suits your style, there's a wide world of festivals out there -- Burning Man in Nevada, Mardi Gras in New Orleans, and Carnival in Brazil, for example. Whether conference or festival, all are exciting ways to introduce yourself to new people and new ideas. Some experiences are priceless but cost money to live through.

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Computers are essential tools for daily life but have notoriously short functional lives. If your computer suddenly dies, gets knocked off a shelf, or is misplaced or stolen, you probably need a replacement in a hurry. You could dip into your emergency fund, but because you know that you'll need a new computer every few years, start saving for it now and reserve the rainy-day fund for unforeseen emergencies.

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Buying a brand new car hot off the dealer's lot may not be the best financial decision. Buying a slightly used car, on the other hand, may make lots of sense whether you need a first ride or a replacement for a trouble-prone vehicle. If you already own a car, there comes a point when it's cheaper to buy than to keep covering the maintenance and repairs on your mechanical buggy. You're likely to face this scenario at some point in your 20s, so saving up for the down payment means less time making do with the clunker or cadging rides from friends.