The following is a guest post.
I just turned 29, so I’ve got a full year to make sure my 20’s were the foundation for a good financial life. I’m happy with some of the decisions I made, unhappy with others.
Generally, people wake up to the value of money in this decade. Some overachievers get the idea a bit younger, with teenage investors growing up to be among the world’s billionaires.
Making money is all about time. Some make it fast through ingenuity and hard work. But these folks are outliers. You and I are playing for scraps compared to the world’s richest people. And that’s fine, because it’s possible to make a perfectly wonderful life for yourself with even moderate wealth.
Personal satisfaction is a characteristic all its own. Financial security has something to do with it, but it’s also possible to cultivate it despite your net worth. That said, here are the three financial moves that I think are just about essential for anyone in their 20’s. I won’t tell you which ones I’ve managed to accomplish myself…
- Start Investing. Investing takes many, many forms. But all forms of investment require time. On one extreme, you’ve got Forex, a form of day trading that allows you to make many investments a minute, if you’re really fast. Forex is based on making value judgments on the near-future values of currency pairs relative to one another. If you can get good at anticipating the way they’ll change value, you can make a lot of money fast. On the other extreme, you’ve got long term mutual funds, which are meant to be bought a held, growing over months and years and decades with the US and global economies. This is all well and good, but if you never start investing you’ll never make any money, and this is money that you’ll need for your future! So invest!
- Get Out of Debt. You’ve just got to do this. In fact, you won’t be able to do #1 until you’ve accomplished #2. Getting out of debt requires a set of skills. You’ll have to change your spending patterns and adjust your expectations for what a good time looks like. You may have to learn how to cook, come up with quick meal ideas, get different friends, or move to a cheaper area. But whatever you do, get out of debt. Debt is a boa constrictor. In your 20’s it is hurting your present. In your more distant future, it’ll strangle your finances completely.
- Buy a House. This is controversial, and also not a reasonable goal for all. But if you can possibly buy a fairly sturdy house in an area that has appreciating real estate, you will be very glad you did. You’ll lose so much money through rent. You probably already have. Add up all the monthly payments you’ve made to landlords over the years. Doesn’t that total make you mad? If you had bought a house ten years ago, you’d still have all that money in the form of equity. Don’t sit there steaming; start saving for a down payment and get a little credit history so you can get a mortgage loan when you’re ready.
Have you accomplished these 3 things? What other things do you think need to be accomplished during your 20’s?
