20 Things You Need To Know About Money in Your 20’s

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Yours truly is turning 30 on Saturday, and I’m feeling reflective about my youth. I’ve been thinking lately what I would tell my 20-year-old self about money if I could go back in time. Even better, I thought about the advice I would give 20 year olds today about finance.

I had a lot to say.

When I wrote the list below, I was surprised how much of the points were merely philosophies and perspectives, rather than hard, concrete suggestions like “save 10% of your income”. Though maybe not that surprised, since this is consistent with my belief that financial strategies are better than financial plans. Numbers still matter. They matter a lot. But I think the motivation behind them matters more. In any case, I hope the advice is valuable and resonates with 20-somethings and 30-somethings alike.

Enjoy!

1. A little matters a lot.

If you can put another $10 towards your debts, do it. If you can put another $10 towards your savings, do it. In a decade, a mere $10 per week ends up being more than $5,000. To say the least, $10 goes far — and this is true with savings AND debt. Use a little money to make a lot of changes in your life.

2. Travel spending doesn’t have the ROI you think it does.

Spending on travel usually gets a free pass as far as expenses go. There’s viral photos that read “Travel is the only thing you can buy that makes you richer” plastered all over the internet by people that don’t know what the stock market is. I travelled a decent amount in my 20’s, but not as much as I thought I would. However, the only thing that surprises me is how little this has actually mattered. Now when I think of it, what I really understand is many, many people will get to backpack Europe or walk the great wall of China, but very few will start their own company. Invest in the right adventure for yourself, ignore what everyone else is doing.

3. One of the most powerful things you can do with your money is give it away.

With your inbox getting spammed by the latest offers from your favorite retailer, it’s easy to forget that your dollars can be used to do more than buy shit, they can make a difference. Make charity part of your budget. If you can’t afford to donate money, donate your time instead.

4. Buying coffee every day won’t destroy your finances.

It’s important to cut costs, manage a budget, and avoid temptation, but agonizing over miniscule details like bank fees or the cost of coffee is a distraction from where you can really make a difference with your finances. Don’t worry about spending $2.50 per day on coffee, worry about over-paying $100,000 for a house.

5. Always negotiate everything.

Negotiate prices. Negotiate pay. Asking for more at your job the single easiest way to add $1,000 to $5,000 (or more) to your annual income without doing any extra work.

6. Glamorous jobs are expensive.

Big paycheques, fancy job titles, and swanky offices are fun. They make you feel important and impress people at parties when you tell them what you do. They also cost a lot. Subtract the cost of your commute, professional wardrobe, expense of dining out with clients & colleagues, and sanity from your gross salary and you are left with much less than you think. Be wary of the price-tag of pursuing your dream job.

7. Gratitude is easier than earning more.

Being grateful what you have costs nothing. Anyone can afford it. Not everyone can afford to devote more time or energy to earning more money. When it comes to solving your money problems, start with your perspective first.

8. Never try to get revenge on the stock market.

Sometimes you will lose your money because of bad decisions. Sometimes you will lose your money because of bad luck. Pause and reflect before you jump back in. The market is not an opponent your can “win” against, it doesn’t care if you get hurt, it will beat you dead. It will also make your richer than you ever would be without it, which makes it difficult to use it responsibly. You can master the stock market, but you have to learn how to do so.

9. Don’t buy into the lie that home ownership is the ticket to wealth.

Unless you’re buying a house with cash, taking on a mortgage is no different than renting, except you’re renting money instead of space. For most people, owning a home is an emotional decision rather than a financial one, and this clouds their judgement when it comes to the math. Renting instead of owning might be the best thing you ever do for your finances.

10. If you’re not making a payment, don’t look at your student loan account.

People who are stressed about their debts will frantically check the balances each day, sometimes multiple times a day. I remember I did this with my student loans, just to see how much interest accrued that day. This is unnecessary agony and pointlessly stresses you out. It’s important to know how much you know, but not up to the millisecond. If you’re not making a payment, don’t stare blankly at your account statements, wishing them smaller.

11. University is one of the easiest and most expensive time-wasters at your disposal. Approach with caution.

Going to school can give you the illusion that you’re being productive or good with your money when you’re not. You won’t blink at tens of thousands of dollars because you’re “investing in your future”. Calculate the real value of your degree, not the value of your hopes and dreams. Graduating into a recession with a low-earning degree and tens of thousands of dollars of student loans is an avoidable hell, but you have to avoid it early.

12. One of the best things you can do for your marriage is not go into debt for your wedding.

Spending more money on your wedding does not make you more married. Have a good time, but don’t get carried away. Couples fight about money all the time. If you keep this out stressor out of your relationship, you’ll have a better shot at happily ever after.

13. The difference between what you want and what you have is probably a side hustle.

If you want to be debt free, own a home, raise a family, enjoy a comfortable retirement, and so on, chances are the only thing that’s stopping you is 20 hours per week and a little creativity. If you want to have more money, start working more.

14. Always try to be paid for your skills and talents, not your time.

You only have so many hours in a day. If you are paid by the hour, at some point, you will max out. You will not be able to see more clients. You will not be able to fit in more sessions. You will simply run out of time. So don’t make your time something you sell. Sell your ideas, your expertise, your personality. Create a single product and then sell it over and over again. But avoid selling your time, and if you have to, make it very expensive.

15. Passive income is the best income.

Dividend stocks work 24/7. They will earn money for you on weekends. They will pay you in your sleep. If you buy blue-chip dividend paying stocks in your 20’s, they will pay for themselves in your lifetime, and then continue to produce a free income stream forever thereafter.

16. Be weird.

Most people are broke. They are over-worked, underpaid, in debt, and have no savings. Don’t take financial advice from them. Don’t adopt their financial plans or goals. Don’t do what they’re doing. Try doing weird things like saving 25% of your income or living without a car. The more things you do differently than everyone else, the more likely you are to end up with a life that is totally different than anyone else’s.

17. Financial mistakes can be opportunities.

At 24, I had almost $30,000 of consumer and student loan debt and a low-paying part-time job. I was ashamed, overwhelmed, and flat broke. Deciding to control of my situation and manage my finances led to the creation of this website, Money After Graduation. This website took me back to school for an MBA. The MBA got me a job at a start-up incubator. The start-up incubator taught me how to become an entrepreneur. In other words, getting myself deeply into debt in my early twenties led to the ultimate freedom of becoming self-employed by age 30. When things go wrong, trust the journey.  Worrying about your finances means that you care. Caring means that you will probably be ok. You’re in it for the long game, be patient.

18. Don’t let your parents help you too much.

If your parents are bankrolling a lifestyle you can’t afford, they’re doing you a disservice. Being broke is uncomfortable, but it’s good for you. It’ll make you work harder for the life you want, and when you get there, you’ll be more compassionate and empathetic towards those who won’t be able to do the same.

19. Take big, calculated risks.

Any plan that requires you to save a fixed amount for any number of months greater than 6 will probably, at some point, be derailed. Do not make 5 year plans. Do not make 40 year plans. Make 2 year plans that hinge on major achievements, but can be abandoned with little consequence if you fail. Your employer, your industry, and your life can change on a dime, and you have to be able to pivot to stay alive.

20. Someday you will die and your debts won’t matter.

Your assets won’t matter, either. Your lengthly and lustrous career will be a blip. Maybe the next two or three generations of your family will remember you, but after that, virtually no one will. Enough time will pass that it will seem like you never existed at all. For this reason, it’s important to not get too hung up on any aspect of your life, but particularly your finances. The problem with money is that, when there is not enough of it, it’s all you think about. It stops you from enjoying the rest of your life. It keeps you from finding your purpose because you’re distracted by staying afloat. But once you have enough to sustain yourself, start looking at something, anything, other than your bank statement. Your life has to be about more than money. YOU are more than your money.

Hope you enjoyed this post!


37 Comments

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  1. We are so much more than our money or our debt. One of the most important things that I’ve learned about money (and life) is that there is no recipe that works for everyone. Once I got comfortable with that, things started to click into place. So much excellent insight in this list. Happy early birthday!

    Reply
  2. “Invest in the right adventure for yourself.”

    Bridget, this literally jumped off the (web) page for me. There’s SO much good stuff in this article, but this in particular is so, so, so important, and I don’t think it gets talked about enough. I’ve felt like a Bad Millennial for not travelling as much as many of my peers, but it’s just never been a high priority for me – to be frank, many of my financial and personal goals revolved around being in a place where I could afford a dog, lol. But that’s what matters to me: being rooted in a place, building my career and spending time with family, and I’m planning my spending to be able to invest in those things. Which, when all your friends are spending $5K to go to Burning Man, can sound a little lame.

    I just absolutely love everything about this, thank you for a wonderful post!

    Reply
    • Thank you Des!

      I totally get the feeling like a “bad millennial” for not travelling more — especially since I always talked about how important it was to me. Turns out it wasn’t. Now when my friends are sharing their beautiful exotic photos from across the globe, I remember my bliss is working from my home office, something virtually no one gets to do.

      It’s good to be honest with ourselves about what we want so we can make sure we get it!

      Reply
  3. I’m super grateful for my years of travel, but I think the big difference was that I didn’t have to pay for it, it was part of my job. Yes, I made very little money during that time so there was technically opportunity cost, but the lack of out of pocket costs made the ROI huge. I think that finding the way to do the things you want to do without major monetary costs when you’re young can make ROI more favorable.

    Reply
  4. Carol

    “When things go wrong, trust the journey”
    I absolutely love this post! Thank you & Happy early birthday!!!

    Reply
  5. You are a philosopher. If this were the 1700’s and we didn’t have the internet, you would be quoted for 90% of Twitter users #motivationalmonday, and I’m not just saying that.

    Here are my absolute favorite parts of this post:
    1) Invest in the right adventure for yourself, ignore what everyone else is doing.
    2) Don’t worry about spending $2.50 per day on coffee, worry about over-paying $100,000 for a house.
    3) But avoid selling your time, and if you have to, make it very expensive.
    4) Don’t adopt their financial plans or goals. Don’t do what they’re doing.
    5) Your life has to be about more than money. YOU are more than your money.

    Anyway, I don’t have much else to say I’m really just here to give you a confidence boost because all of these notes are great advice. THANK YOU! Also, Happy almost Birthday.

    Reply
  6. Katelynne

    “Spending more money on your wedding does not make you more married. ”

    Loved a lot of this post but love love loved this. Can you please email this to my sister so she’ll get off my back?? Thanks!

    (Kidding, I’m totally sending this to her for more than just that). Great post!

    Reply
  7. “Invest in the right adventure for yourself, ignore what everyone else is doing.” — I can’t even begin to explain how much I am captivated by this statement. You have your own dreams, aspirations, strengths, weaknesses, goals, values. Comparing to others adventures can lead to absolute destruction of your self-worth. This is so huge – everyone fosters a different definition of “success,” “happiness,” “love” and so forth. Thanks for spreading this word, along with all of your other fantastic tips & cheers to turning 30! Maybe a special edition of Drinks & Dollars will be coming out? :)

    Reply
    • Glad you enjoyed it!

      hahah another Drinks & Dollars will be coming out as soon as my liver can handle it…. It is my birthday weekend coming up. I can only take so much abuse.

      Reply
  8. International Student

    Bridget, you are simply amazing and I’m so lucky to have come across this blog! Number 2 really resonated with me because I have always felt weird or stupid because I’m not too concerned with travelling for now.

    All I want in life is to never experience the financial strain and turmoil my parents went through in life, always trying to make ends meet. I’m not where I want to be yet, but your blog is certainly helping me find my way. This is gold, sending it to my coworkers who are also in their early 20s

    Reply
  9. Ok, trying to take deep breaths and be okay with the fact that I followed none of this advice in my 20s. Luckily, it’s still good advice for me now! I am especially trying to work on negotiating and being weird.
    Although I’m already fairly weird, so that works out well. :)

    Reply
  10. I think one thing I learned from my finances in my twenties is what a difference a year can make. One year of hustle, one year of change, one year of post secondary education. It’s pretty impressive.

    Reply
  11. Katie

    This is one of my favourite posts to date!

    Reply
  12. Jabari

    Your blog posts are always a breath of fresh air when it seems like everybody else is peddling this one-size-fits-all American (or Canadian!) dream. The details of the dream have changed from our parents’ version but it still relies on the same fundamentals such as letting your jobs and degrees dictate your value…blech.

    Anyway, I appreciate your blunt but nuanced perspective on these topics!

    Reply
  13. Jayne

    decent work clothes are soooo expensive youre so right!

    Reply
    • Jayne

      I’ve really noticed the little things adding up now that I’ve finished school and started working. Instead of spending that money on coffee (cause its free at work, bonus!) that money can go toward debt. 2.50 a day adds up!

      Reply
  14. #20!!

    YES, YES, YES!

    I f*cking love your stuff, birthday girl.

    Reply
  15. anon

    Why should we try to do little things like paying an extra $10 a week but not worry about spending a $2.50 coffee a day? Doesn’t make sense.

    Reply
  16. Great post! Thank you for sharing. Hope to hear more from you.

    Reply
  17. Thanks for that. In fact, that is what I am doing and I will supercharge for 2016.

    Thought you’d be interested in seeing my Net Worth update for November
    http://www.myricketyroad.com/2015/12/01/net-worth-update-november-2015-e1076/

    Cheers
    MrRicket

    Reply
  18. Very groovy post. I particularly like number 11. Call me a curmudgeon but at least half the classes required for a vaunted bachelor’s degree are a waste of time and money. And, yet, the business model of higher education is sacrosanct. Insanity! On a happier note, congratulations are turning the big three-oh.

    Reply
  19. Many gems here. I especially like #4–buying coffee everyday won’t destroy your finances. So tiresome to hear over and over so-called personal finance experts describe the damage done by a daily Starbucks. You’re right–get the top 3-4 BIG things right, when it comes to spending, and enjoy your Starbucks. You’ll be good! (Alternatively, get the top 3-4 things wrong, and it won’t matter how little Starbucks you drink–you’ve screwed yourself, financially.)

    Reply
  20. Thank you for this. I whole-heartedly agree with this post. My favourite is number 7 – gratitude is easier than making more money. I have never thought of this money tip and I love it. Such a great outlook. And this is coming from someone who loves budgets and the nitty-gritty of financial plans/goals :)

    Reply
  21. Great stuff, love love #20.

    Reply
  22. It is always easier to pick a lower standard of living when it comes to the big things like houses and cars, than to save the money needed for the higher standard of living from all the little expenses. To use your example, skipping that $2.50 coffee every day for a year only gets you about $75.00 per month. You can get that $75,000 by buying $15,000 less house–and in doing so you may reduce other bills as well.

    Reply
  23. Troy

    Thanks for this post. It came along at the right moment. Number 20 sums up my life right now. I have a substantial asset base but a recent poor decision means that I am not moving closer to my financial goals and it has been stressing me out. I need to chill out and make a plan because I know that its a momentary blip once I face up to it.

    Reply
  24. Great post Bridget! I especially like numbers 9, 11 and 19.

    So many of us were encouraged to seek further education, buy the house, etc. It’s so ingrained into our heads that many people don’t question or second guess these big decisions. I was lucky and able to secure a job out of University. I was unlucky in that I followed the path prescribed by my parents rather than my dreams. Now, almost 30, I’m finally taking steps to do what feels right for ME! It’s exhilarating and scary and in many cases against the norm. I don’t want to live in the suburbs, I am totally happy with my 10 year old car. I thought I was alone in this regard but it’s fantastic to find some like minded people!

    Reply
  25. Louie

    Hello!
    First time subscriber to your blog, and I have to say, I’ll be an avid reader from now on! After reading this, I simply thought to myself ” This is brilliant” Thank you for the post, it’s given me great inspiration! :)

    Reply