Guest Blog: How to Be Financially Savvy in Your 20s
Invest in yourself financially:
The power of compounding interest combined with a longer time horizon until retirement makes it possible for a young person to put away a relatively small amount of money, the growth of which can race past someone with a shorter time horizon putting away significantly more. For someone in their early twenties, even building a savings habit of a couple hundred a month can fully fund their retirement if placed in the right investments.
Sometimes it’s difficult to see the value or even possibility to find extra money to put away when the costs of adulthood set in. When your bills ramp up and paying rent in Denver feels like you’re throwing money down the drain, it’s easy to feel like finding money to put away is impossible. Especially if you’re dealing with student loans.
Talk to an advisor about what your long-term goals are and build a plan that considers your current income and expenses. A good advisor will be able to help you understand options for saving and investing, even if your disposable income is minimal. Once you’ve built a habit of saving money on a regular basis, you’ll start to build confidence that you can do more.
Invest in your own skills and education:
The difficult part of educating yourself is that traditional high-school or college education doesn’t necessarily include education about things like understanding taxes, starting a business, buying a house, or saving for retirement.
I’d encourage everyone at some point to paint a mental picture of who you’d like to become. Once you’ve described to yourself the kind of person you’d like to be, you can break down a list of the necessary skills and education to make that happen. Maybe that person is a great public speaker, runs a successful business, and has an amazing family life. If that’s the case, that list might include presentation skills, knowledge of how money works, and the understanding of business accounting and sales.
Start with books. Read as much as you can about what interests you. If you don’t enjoy the act of reading, listen to podcasts or audiobooks. Either way, you’ll be exposing yourself to a constant stream of new information and education. Attend free classes when available. Libraries, community colleges, and coworking spaces are great resources because they’re always offering education in different areas. Follow Live.Laugh.Denver. for more amazing classes and workshops as well. Lastly, if you know someone who’s amazing in a certain area, ask them to teach you. If they don’t have time or they aren’t interested, ask them to point you in the direction of someone who’s better suited to teach you.
Invest in the right relationships
You might find in your twenties, you’re in a weird spot where some of your friends are responsible adults with kids, houses, and lucrative careers, while others are still just figuring it out. Who you align yourself with makes a difference. Surrounding yourself with the kind of people that will help you move forward and grow yourself as a person is essential. If you’re around people who are supportive and trustworthy, your goals are more easily achieved.
Don’t restrict yourself to spending time with people in the same finance or age or experience bracket either. When you’re in a room with people who know more than you, you’re in an environment that encourages you to learn and grow. If you surround yourself with negative people who don’t understand you or your goals, it’s going to be a constant fight to ignore that influence.
Please don’t be scared to align yourself with people who intimidate you. Many of the people who are wealthy, successful, and charismatic weren’t always that way. They remember what it’s like to be young, broke, and looking for mentorship and opportunity. I encourage you to seek those people out, and they can have a huge influence on where you end up and how long it takes you to get there.
Thank you to Denaye Austad, Transamerica Financial Advisors for this great advice! If you’d like to reach out to her to learn more, you can contact her by phone at (303) 522-1724 or email at firstname.lastname@example.org.