When I celebrated my 30th birthday, I spent a lot of time in reflection for my past and present, and started planning for the future. Inspired by this milestone birthday, I wanted to share financial advice I wished I had received in my 20s, so you, my younger sisters, can set financial goals for your 20s.
Most 20-somethings receive a ton of unsolicited financial advice. Everyone with a checkbook believes they have it all figured out, and confusingly, most of the advice is seemingly conflicting.
What I’ve learned is that no matter what you are told, you have to take the “responsible role” and research your own situation. You might find out the advice you’ve been given is incorrect, or detrimental to your specific situation.
I remember when my little sister told me that her credit union gave her advice to keep a balance on her credit card every month. This is not only expensive advice, it’s wrong. Using a credit card appropriately means not paying for interest by paying your balance in full every month.
So at the end of the day, you’ve got to do the work and educate yourself. Knowledge is power.
But so many 20-somethings don’t understand how detrimental debt can be. You cannot get ahead with a life of paying interest and payments. You should be earning interest, not paying it.
Too often, our money is tied up in car payments, student loans, and credit card minimum payments that we can’t invest as much as we would like.
Debt will defeat you. Even if the interest rate is low, the monthly payments take your cash flow that you could have used to invest money or even take a sweet vacation when you need it.
Which leads me to my next piece of advice…
Spend money on experiences
Hands down, the best thing I did for myself in my 20s was travel… a lot. It might seem counterintuitive given the advice I shared previously, but if you pay off debt or get really close to it, spend money on experiences instead of a bunch of stuff.
Those new workout clothes might seem like everything you’ve ever wanted in the moment, but you will be so much happier with lifelong memories of taking an inexpensive vacation or having late night conversations and belly laughs with friends around the campfire.
When purchasing items, you might think they will bring you happiness, and in the moment they might produce a slight boost in your endorphins, but it fades almost as quickly. The memories from experiences last much longer.
I used to think travel was too expensive, until I learned that you can absolutely travel inexpensively using services like Scott’s Cheap Flights, Airfare Watchdog, or Google Flights. You can just as easily spend more through retail therapy at your favorite clothing store than some of these flight deals.
Need help saving up for a trip? The Nav.it app lets you set your goal, and tells you how much you need to contribute daily, weekly or monthly to hit that goal.
Invest in quality over quantity
This is a super important piece of advice I wish I received early in my 20s. When you do make purchases, always invest in quality pieces. Maybe it’s one pair of jeans that are higher quality and cost a bit more. That’s better than always going for the cheap pairs and having to consistently go jean shopping.
Whatever it is, invest in quality items. Quality doesn’t always mean expensive either. There are stores like Ross, Marshall’s, TJ Maxx or Nordstrom Rack, that allow you to shop for quality items at a fraction of the cost. Spend money on timeless looks instead of trendy items. You’ll look more put together and can hold onto them much longer as they don’t go out of style.
I used to buy really cheaply made shoes and clothes…until I purchased my first blazer that fit correctly and was made from durable materials. It was a game changer. I looked like a million bucks and I’ve had that same blazer for five years so far! Not bad!
And for my traveling, Nav.igators: get a high-quality piece of luggage. Trust me, it matters!
Retirement isn’t that far away
Even though it can feel like retirement is a million years away, as a young 20-something, you have time on your side. In the investing world, time equals money, and that is because of compounding interest. This allows your money to grow as the market goes through its ups and downs. Those ups and downs, your dividends, and the consistency in which you add to your retirement accounts is what makes you a very wealthy person in the long run.
The more you invest now, the sooner you can retire. It matters a LOT.
If I could go back and give my younger self advice, this is the exact stuff I would tell her to set as financial goals over a cup of coffee. I hope it inspires you to take control of your financial life and start to make great decisions with money.
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