You’re young, you’re hungry, you’re ambitious. You might even (at times) be a little confused or concerned for your future. You’re in your 20s, and here are five smart money moves to set you up for success now and in the future.
Start saving for retirement. Say what?! Retirement’s years off, and you’ve got crushing student debt and a much lower salary than you expected. Start saving for retirement anyway, even if it’s only $20 a week. If your employer offers a 401(K), you’re passing up free money if you don’t take advantage. Even if you don’t have access to this source of free money, put a little bit away every payday for retirement. The money you save now will compound into a much bigger sum by the time you’re ready to retire. Take advantage of the power of time and do yourself a huge favor by saving for retirement now.
Pay your dues. You’re just starting out in your career, and the truth is that you have dues to pay. Find a mentor. Do the grunt work. Fetch lunch if you’re asked. Be professional. Do the work. Paying your dues now will reap benefits later, so learn your trade, watch those who are successful, and gain a reputation as a hard worker. Trust me, it will pay off.
Pay off your lingering debts. Student loans suck. Live like a miser and pay ’em off. That stupid credit card you got in your junior year (and promptly hit the limit)? Scrimp like you were still in college and pay it off. Getting debt paid off before you marry, have a baby, or change jobs makes a huge difference in your quality of life and in your peace of mind. Pay off your debts early and don’t accumulate huge new debts until you’ve done so. Drive a beater for a year or two rather than saddling yourself with a car loan equal to your annual income. You deserve better!
Educate yourself about money. So you don’t understand how a mutual fund works. They never taught you about loan amortization in school. It’s not too late for you to learn about money. Read up on anything you just don’t get until you understand, and don’t invest in anything until you know how it works. These days you can learn anything you need to learn from the internet. Don’t be afraid to ask your friends and coworkers How Stuff Works. You can learn a lot from salespeople, even, but be very aware of their agenda and double check what they tell you. The point isn’t how you learn, it’s that you educate yourself.
Buy real estate…if you’re ready and if it’s what you want. So you’ve always dreamed of living downtown, and you have the chance now…but you can’t afford to buy. Don’t sweat it. Live the life you want to live and rent. You want a home of your own but you’re still paying off student loans. Focus on the “home” part and bloom where you’re planted. You don’t need to own a home to make it your own. On the other hand, if you and your beloved have paid off your debt and you’re already discussing what to name your first child, maybe it’s time to buy. Think carefully about what you want from life (right now and during the next few years) and plan accordingly. You’re not a lesser person if renting is right for you right now.
Enjoy your 20’s and make smart financial choices to carry you into your 30’s and beyond.