Money In Your Twenties

Your 20’s look very different today than they did even 10 years ago. Sure, you graduate from college and hopefully get out on your own. But these days, you’re lucky to get a job, and you may be saddled with tens of thousands of dollars in student loan debt. But there is hope. Here’s what I wish I’d known about money in my 20’s.

What I Wish I Knew in My Teens and College About Money in My 20’s

Growing up, I was always the saver. While my brother spent his money on action figures and N64 games, I stashed away my allowance in my dresser and eventually opened a savings account. In high school, I did admin work part-time and dutifully deposited my paychecks in my bank account.

But in college I strayed from being fiscally responsible. With the freedom of living away from home, I was suddenly spending with little regard for the long-term value (or lack thereof) of my purchases. I stopped trying to save and even overdrew my bank account a couple of times. Only by $5, but still.

When I got a job waiting tables at Red Lobster (my uniform was a tableau of marine life – are you jealous?), I became responsible again. I stashed away my tips in my checking account. After I studied abroad in Russia my junior year, I traveled around Eastern Europe on the wages I earned that summer.

In early my teens, I knew the importance of saving; I had understood that since childhood. I just wish I had carried that knowledge with me to college instead of disregarding it.

What 20-Somethings Should Plan For (And Why)

In this economy, 20-somethings should plan for periods of unemployment — both right out of college and between jobs. They should consider unpaid internships to get experience relevant to their desired line of work, and come to terms with the fact that they may have to work at a coffee shop or bookstore until they land a job.

20-somethings should save for travel because it’s the perfect time to do it. When I was 24, I quit my job in DC to travel around Argentina and Belize for 4 months. I didn’t have a job, kids, or a house and it was amazing. I had saved enough to travel for a year, but decided to spend some of it on travel and some on a house. You don’t have to wait until you retire to travel. Do it now.

20-somethings should also know that student loan debt will attempt to swallow them, but they can fight back by making monthly payments and sticking to a long-term payment plan.

20-somethings should plan for expenses that seem far off, because they’ll sneak up on you. Before you know it, you might want to get a car, buy a house, get married, or have a baby. All of those are massive expenses and the less debt you take on, the better. Your late 20’s and early 30’s are really just around the corner. Start saving now for expenses you’ll have 5 or 10 years down the road.

Three Best Things You Can Do for Your Money in Your 20’s

1. Save. Put money in your retirement account, especially if your employer matches your contribution. If you don’t, you’re just throwing money away. Retirement may seem far off, but if you don’t save for it in your 20’s, you’ll get behind. Save for the short-term, too, in a savings account. You don’t have to deposit huge sums every month; every little bit gets you closer to your savings goals.

2. Spend Thoughtfully. At my second job out of college in Washington, DC, I worked with a bunch of fresh-out-of-college 22-year-olds. Every day, they spent $12 on sandwiches and chips for lunch. They could have packed the same lunch at home for $2. They also went out to bars at least 4 nights/week and racked up debt with their $10 drinks. And — surprise, surprise — they were all drowning in student loan and credit card debt that they couldn’t manage to pay each month. Make sure that doesn’t happen to you by deciding what your priorities are, and spending in moderation on those things you really care about.

3. Pay Off Your Debt. “Oops, I forgot to pay my credit card bill again! Ha,” A seemingly responsible friend of mine said, amused. She didn’t rush to pay it; she was simply making an observation. I was shocked. Didn’t she realize she was destroying her credit score? That she’d have to pay ridiculous fees that could have easily been avoided? She did understand, but she had an air of early-20’s disregard about her when it came to finances. Don’t fall into the same trap. Pay off your debt — little by little — and don’t miss payments. You’ll be glad you did in the long run.

What do you wish you knew about money in your 20’s?