When you reach your 20s, life seems like it is right where you want it. It’s in the palm of your hand. You can do whatever you want. You are an adult with your own life. You are suddenly making the decisions and the rules in your own life, and how that affects you when you grow older is up to you. One of the things that most affects kids when they reach their 20s is the fact that they don’t know how to handle their money. Perhaps they never had any money to work with growing up, and perhaps they are just being introduced to money of their own and they’re not sure what to do with it. There are so many things that could go wrong in your 20s and there are so many things that could go right in your 20s. Your job is to choose how you want to live your life and start when you reach your 20s (if not sooner) so that you don’t make the same monetary mistakes during this decade that most of the rest of us did. We’ll tell you what they are and how you can avoid them in your own life.
You can go to college, and it’s going to be expensive. There is no getting around the fact that college courses are not cheap. However, if you can’t afford the cost of private college tuition or a four-year university for four straight years, then don’t. Try going to a community college for two years to earn your AA. This is something many people do and something that works out well for most. It is when you finish with this that you get to go to the college of your dreams, only pay for two years of it and still get credit from graduating from your dream university. There; you save, you win and you’re on top of things.
You have to save. Even in your 20s, savings is a big deal. You need it. You should start with a simple emergency fund. This fund should host $1000 and it should have only that money in it. You can add more, but this should not be your savings account for all things. It’s for emergencies that could have a negative financial toll on your life. You should also have a savings account you use for other things you want to save for – and you should save as much as you can since it’s an investment in yourself.
Not Saving for Retirement
You might scoff, “Well, retirement is a million years away. I’m only in my 20s, after all, and that means it’s not something I have to think about for years. Retirement is for old people,” with an eye roll and an attitude, but you’d be wrong. I was 21 yesterday and now I’m celebrating my 10th wedding anniversary, pushing 32 and about to celebrate the retirement of a family friend who isn’t that much older than my husband and I. And that means there is no such thing as too early to start saving for retirement. This is especially true if you have an employer than offers contributions and matches your own. The days are long, but the years fly; trust me. I’m still in shock over the wrinkles on my forehead that appeared overnight and has me toying with the idea of Botox.
What a waste of money. I will not say this again; renting is a waste of money and anyone who does it is throwing money away. You’d be better off heading to your nearest gentleman’s club with your ATM card and PIN in hand and making it rain dollar bills because that’s essentially what renting is – but at least this way you might get a little something out of it. Renting is not good. I know that most people can’t afford to build or buy right away, but that’s what living with your parents is for. You live with them, you save money, you live in a dorm, you save money; you save so you can buy. Renting is a huge wasteful waste. If you can avoid renting, avoid it; it will be the best financial decision you ever made. I know you want to ditch your parents right away, but you will regret that in your 30s when everyone else is buying homes and you’re not. I can tell you right now that my husband and I made the decision before we were married to go to college while living at home and we forewent the years of partying and renting, and we built our first home at the age of 21. We’re 31 and 32 now and we just bought our dream home while many of the people we grew up with are just now buying their starter homes. No regrets here.
So you have a J.O.B. and a paycheck. Obviously you have to go out and buy a BMW now, don’t you (I’d advise against this for several reasons)? No; you don’t. In fact, you shouldn’t. One of the worst things you can do in your 20s is start buying things just because people say, “Sure! We will give you credit!” How about not using credit and saving your money so you can pay for things in cash? Or how about buying what you can afford instead of overextending yourself for a title or a logo? I’ll tell you that in your 20s you will care about these things. In your 30s, it matters a lot less. In fact, most people don’t care much about what you drive or wear at this age; they just care about how much their 401k is growing and whether or not they are doing a good job with their kids, or if they should go with light granite or dark when remodeling the kitchen. The make of your car is no longer relevant or important. But you will still want leather seats, because kids are gross.
Photo by Harold Cunningham/Getty Images