1. Plan AheadI completely agree (as should be expected given the name of my blog). Financial planning is something I think we often fail to do in our 20s because we are too busy trying to figure out our life. Between roommates, jobs, living on our own for the first time, and trying to figure out how we fit in post-college we are swamped. We live paycheck to paycheck and we live day to day. If I had started planning right out of college I would be in a better place today.
2. Live Within Your Means
Just like the SNL sketch Brunette on a Budget posted says "Don't buy stuff you cannot afford." Staying away from credit card debt is one of the best things you can do for yourself in your 20s.
3. Make Savings a Habit
Think of savings as a bill and make it automatic! The less you have to think about it the more of a habit it will be.
4. Pay Off Your Credit Cards
I would like to take it one step further and say stay out of credit card debt, but if you are in it (and aren't we all at some point) make it a priority and pay it off. This is also part of planning as in our 20s we should also be thinking about our credit scores.
5. Start Investing
As soon as you have a job which has a retirement benefit take advantage of it. There is also always the Roth IRA. I'm copying straight from the article on this one:
Let's say a man starts socking away $200 a month at age 25 in an account earning an average annual return of 8%. By the time he turns 65, he'll have $703,000. But if he waits until he turns 30 to start saving, he'll end up with only $462,000.6. Establish Credit
Having a good credit history will benefit those in their 20s down the road as they apply for auto, home and other loans.
7. Have a Marketable Skill
This is not one I would have added to my own list, but it makes sense. This one is all about your education and your job skills which equals your earning power. If you want to go back to school, make sure you know what you want to do and what that degree will help you get. I'm a big believer that undergraduate education should be steeped in liberal arts and graduate education should be about preparing you for a certain sector/job.
8. Cut the Financial Umbilical Cord
Kiplinger talks about this in term of your finances. Your parents should no longer be preparing your taxes or managing your investments. I have my own two sense to add to this one. In some parts of the country to buy an apartment/house you need help from someone. NYC real estate is incredibly expensive and there is no way I could have bought something without help from my parents. My apartment is an investment we all own and share. All decisions about it are made as a family. Manhattan real estate is also its own beast. Case in point I bought my apartment in January of 2007 and even with the downturn it is still worth 25K more than I paid for it. So I haven't cut the financial umbilical cord, but I don't think it is a bad thing.
9. Marry Wisely
It is important that you have similar values with the person you decide to spend the rest of your life with. It is also important that you share the same financial values. I'm not sure how many couples actually spend the time to make sure page when it comes to your financial goals. I also think this should be a goal in your 30s as well. Not everyone gets married in their 20s!
10. Have Some Fun
Ah the most important is always saved for last. Don't let money management take over your life. Enjoy your 20s, even if that means splurging here and there. Just remember that you can't get this time back.
Since I'm creeping up on 30, tomorrow I'm going to review the 10 commandments for your 30s.
3 comments:
I agree with the planning ahead and making sure your with somebody that has the same values and our on the same page financially. Although I am not on the same page as Rambo, we know each others money matters and are in agreement with what to do in our future. I also love that Rambo is repsonsible with money which helps keep me on track and motivates me to do well too. If I had someone who had a nature to waste money like myself, we'd probably be living in the basement of my stepmoms. :)
I agree that planning ahead is crucial. I am 24 and very proud that I already have a retirement account and I am working to become financially independent. By BF and I are on the same page with finances so that makes it much easier. I think pointing out #10 is important. Sometimes finances can become so overwhelming that it consumes our every though. Keeping in mind that there are other things in life is important.
I am 21 and just about to graduate. I agree with these all, but two things that seem especially true for college graduates seems to be to "cut the financial umbilical cord" and to start investing. A lot of college students are already independent, but there are also many who still rely on their parents for money. Leaving this state of mind can be hard and I think once you graduate, your thrust into the world by yourself. I have been trying to rely on my parents less and less over the years (financially)and i think a lot of college students should being to take note of their dependence. Also, invest lots when your young, the younger the more returns, and as always have fun!
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