According to a study by Amerisleep, 49% of Americans admitted to losing sleep over financial stress in 2025. The survey also noted that 56% of Americans have lost sleep because they fear that they won’t be able to pay their bills. While stressing about money isn’t rare, it’s important to start taking your finances seriously from an early age so that you can get a head start.
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A thread on Reddit sparked conversation because a 22-year-old electrician asked for advice on what they should do with their savings. This user shared a screenshot indicating that they had $22,000 saved in emergency funds and $10,000 in savings. We spoke with a financial advisor and expert to gather tips for this Reddit user and any other young person in this situation.
Reserve Money Needed for Living Expenses
“The first step is to carve out one month of expenses to leave in your primary bank for day-to-day expenses,” said Hanna Kaufman, certified financial planner (CFP) and financial expert from Betterment. You want to start by leaving enough money in your primary bank account to cover bills for one month at a time. You always want your checking account to have enough to handle any payments so that you don’t risk money that you need in the short term by investing it.
This means that the first step is to take stock of your monthly bills so that you know how much you have going out. You can also look into reducing some fixed expenses by cutting a subscription or renegotiating the current rate so that you can continue to build your savings. Either way, being organized with your monthly income and expenses is helpful.
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Create a Clear Plan for Emergency Savings
While having $22,000 saved up for an emergency is helpful, it’s worth mentioning that you want the bulk of your savings to be used towards growing your net worth. “Move the excess into a high-yield savings account (HYSA), where it can earn 4% to 4.25% APY. That’s hundreds of dollars a year in passive income with zero risk,” Kaufman added.
Kaufman said this person should keep a minimum of three months of expenses in a separate emergency fund. She stressed that an emergency fund is your financial seatbelt because it’s essential when you need it.
Kaufman noted that with your cash needs covered, the next priority is tackling debt and building long-term wealth.
Pay Down Any Debt
Kaufman emphasized the importance of managing your debt wisely. While it’s unknown if this person has any debt, it’s crucial that you make on-time minimum payments to protect your credit and avoid penalties. This person could get aggressive with making their debt payments if they have any high-interest loans at the moment.
Start Investing To Ensure Your Money Works for You
“Parking $30,000 in a low-interest account is like planting seeds and never watering them,” Kaufman explained. “You’re sitting on potential, not progress.” Financial experts universally agree that investing your funds is crucial to ensure you benefit from compound interest. You want your money working for you instead of sitting in an account that earns very little interest.
“Investors need to begin compounding early and let that compounding work its patient magic over decades,” said Robert Johnson, Ph.D., chartered financial analyst (CFA), chartered alternative investment analyst (CAIA) and professor of finance at Creighton University. “The longer your time horizon, the more you let compounding work for you.” Since this person is only 22, they have a long time horizon, so they have a considerable advantage when it comes to compound interest.
Invest in the Stock Market
While there are numerous ways that a young person can start investing, Johnson recommended that you allocate your funds to a low-cost, diversified equity ETF or mutual fund that mirrors the S&P 500 at an early age. “For the vast majority of investors, the KISS mantra — keep it simple, stupid — should guide their investment philosophy. Investors simply can’t afford to make oversized bets on individual securities,” he said. Johnson admitted that it can be tempting for a young person to purchase the stock of a product they like or a company they work for, but that investing in a broadly diversified basket of securities is a prudent strategy.
Johnson pointed out that trying to pick individual winning investments is a loser’s game and that the solution is to invest in diversified funds. He also noted that the second advantage of putting it in a low-cost index fund is that you minimize fees. By lowering your costs and spreading out your risk, you can have your funds grow while you focus on building additional savings.
Johnson shared the following calculations:
“If our hypothetical 22-year-old investor puts the entire $30,000 into an ETF or mutual fund that mirrors the S&P 500, assuming a 10% annual return (which is 0.4% lower than the historical average), they would accumulate over $1.8 million by age 65,” he said.
If this young person starts investing in the stock market today, they’ll set themselves up to be a millionaire in their 60s so that they won’t have to stress about money in their golden years.
Start Investing for Retirement
Kaufman acknowledged that saving for retirement at 22 may not feel urgent, but it’s the biggest opportunity because this young person could retire much earlier. “Some great places to start would be to open a Roth IRA and start contributing regularly. Also consider contributing to your employer’s 401(k) — especially if there’s a match (that’s free money),” she added.
Make a Financial Plan
Kaufman stated that the key is to stay organized and have a plan. “The goal is simple: give every dollar a job. You’ve already done the hard part by saving — now it’s time to align that money with your goals and put it to work,” she said.
Someone with a significant amount of savings at a young age is in a strong position to create financial security. The key is to have a plan for your money so that you stay motivated and focused on the long-term. The plan that you set up will vary based on your personal situation (possible marriage, family plans, travel ambitions and career trajectory) because there’s no such thing as a one-size-fits-all solution in money management.
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This article originally appeared on GOBankingRates.com: I’m a 22-Year-Old With Over $30K in My Bank Account: 7 Pieces of Advice From a Financial Advisor
