When you’re a young pup, you’ve got one thing going for you that’s just gold!
And that thing is time.
I don’t think young people appreciate just how important time is. I think its us older people who wake up some days and go what the heck I’m pushing 40 already.
It’s not a good feeling.
But when it comes to money, and getting rich, well time is probably your most important asset. You see, money takes time to grow. Just like a plant. So you want to plant seeds in your little money garden early. The earlier the better.
Not only that, you also want to plant the right types of money seeds. Money grows on autopilot when you plant the right seeds young. It’s not hard to do either. I’ll show you….
But first, the big question is what are the most important money moves a person in their 20’s should make? Invest money? Start a business? Get a job early on? Hmm… questions questions.
Here’s my take on what every 20 something should do with their finances.
7 smart money moves every 20 something should do
1. Start an online business
As a 20 something, you don’t have a lot of money. Heck, you barely have enough time to see friends, work out, and eat healthy.
But the beauty of starting an online business is that you get to work on it on your own pace whenever you have the time. It’s not a store in a mall you need to attend to no matter what. And this convenience is HUGE!
I personally believe the BEST online business a 20 something could start is a blog. When done right, blogging can make you an extra $500-$1000 per month, within 6 months or so. That’s actually a very very reasonable statement.
In perhaps 2-3 years, blogs that do well will make $100,000 per year. And more. This blog is heading that direction quickly.
You see, blogging is the perfect business for someone who has very little money and wants flexibility as to when they can work on their business. It’s really the ultimate “side hustle” for a 20 something.
What’s more fun that writing about stuff you would talk about anyway, except you get to make money from it?
Now, most people stop here and say “I don’t know anything about blogging”. Well, everyone needs to start somewhere. If you’re interested in learning more about making money blogging, awesome!
I created a free resource for beginners to learn how to set up a blog that makes money. You can check that out here.
2. Make side income on your free time
A lot of people spend their weekends doing a lot of things that are “fun” I guess, and what everyone else does…. but as far as your finances go, it does nothing for it. In fact, it does it NO GOOD at all.
Look, going to the movies, checking out cool clothes on a summery afternoon, and going out for pool and drinks is a lot of fun. But if you’re someone who wants to get rich and be wealthy by the time you hit 30 (or even in your 20’s), you’ll need to cut a lot of that out.
You’ll need to spend your free time making more money. Because at the end of the day, the more money you have, the more money you can make with it.
You can start a blog like I mentioned above, and that’s a longer term strategy to make money that’s dope, but to make money immediately, I really like filling out surveys for money online. Its easy to do and it pays decently well.
All you need to do is answer questions and then you get paid cash. It’s really that simple, and it’s a great way to spend a few hours of your day on the weekend or when you’re bored and have nothing to do.
I made a list of the best paying surveys for money here. You can check that out here.
3. Invest your money now
Money takes time to grow. The more time you have the more your money will grow basically.
Starting investing in your 20’s vs your 30’s is a HUGE HUGE difference. It usually means hundreds of thousands of dollars in difference. You see, money compounds over time, and it grows exponentially. So in the later years of compounding, like when you’re close to 65 lets say, every year that you continue letting your money grow is HUGE when you’ve already let it compound for 45 years already, vs let’s say 35 years. It’s only a 10 year difference but it could mean half a million dollars or more in your pocket if you started earlier.
I highly recommend investing in stocks, mutual funds, bonds, etc. You MUST learn basic investing principles. It’s just something you need to do in life, and I don’t feel it’s negotiable. You can always hand off your money to someone professional to handle for you, but let’s get real…. nobody will take care of your money better than yourself.
I recommend opening up a brokerage account. A brokerage account is an account where you buy and sell stocks, mutual funds, bonds, and more. It’s you’re little portal of investments.
You don’t have to buy anything right away or make any moves yet. But open one up and use the practice trading account. It’s 100% free and it’s exactly like trading stocks for real, but you use play money.
When you get the hang of things, then you can start buying and selling stocks and other types of investments.
A very popular investment brokerage account is TD Investing. I recommend them.
4. Start building your credit as early as possible
Most people don’t realize how important their credit is until they ruin it, or they want to buy a major purchase like a home and they have a hard time getting a good interest rate because they have like no credit history.
Building credit will save you A LOT of money today and in the future. You can get a great credit score within a few years, and as long as you continue to take care of it, any loan you get in the future, whether it be for a car, home, or student loans, you’ll get the cheapest rates available.
If you don’t have credit or don’t take care of your credit, what you pay in interest could be double or triple the rate it would be if you had started building good credit early on.
Building credit is actually really really really easy. The easiest way to build credit is to get a credit card, use it every month, and pay it off in full every month. This is my favorite way to build credit from scratch.
Here are some excellent resources on getting a great credit score:
5. Get many credit cards early on and use them a lot
Gasp! get lots of credit cards? but wouldn’t this be bad for me? And why do I need a lot of them anyways?
That’s a totally valid question!
But here’s the deal with credit cards.
They build credit history fast. When you’re young and don’t have a lot of credit history, you don’t get a lot of favorable loan terms. In the end, this means you have to pay more money to borrow money, even though you are perfectly responsible at paying it back.
Look, credit cards are great because the best ones give you rewards. Like these best reward credit cards here.
On top of that, you will be building your credit history. A credit card with 5 – 10+ years of history of good payment will skyrocket your credit score.
So why get several credit cards? Because the MORE credit you have, and the more you can show you are responsible with a lot of credit, the more likely it is you’ll get better terms when you borrow money.
Basically, having 3 credit cards that are 5+ years old that have been continually paid off every month is infinitely better than having just 1 credit card.
I recommend using 1 credit card as your main credit card, and then use the other credit cards once per month just to “use” them. Charge like a bag of chips to it or whatever, then hit up your online banking and pay it off.
It’s perfect! and so easy!
Within just 6 months to a year, you should see a significant increase in your credit score. And it will continue to go up and up until you get near the max if you continually use credit responsibly.
Again, the earlier you get credit cards, the earlier you can begin building great credit, so when it comes time to get a loan for a car let’s say, you’ll get the lowest possible interest rate. Prep yourself for later on in life!
6. Go to school only if you know what you want to do
I went to University only because my mom made me. It wasn’t the worst idea, but looking back, I wouldn’t have done it the same way. I took a general program and ended up with a degree in economics, but it wasn’t my ideal degree. I just took it because I didn’t know what else to do. I totally would have taken business if I could do it again.
What I’m getting at is school is really expensive and it’s not the place to “I’ll just take some courses and see what I’ll like”. That’s a WASTE of money. Why don’t you read up stuff on the internet for free instead. It’s basically the same info.
Look, student debt is a KILLER. When you’re done school and you have $50,000+ to pay back, you’re paying it back until you’re well into your 40’s. And $50,000 is not a lot of student loan debt if I’m being really honest.
Don’t mess around with student loan debt. It will affect you for most of your life. Only go to College if you truly know what you want to do.
Otherwise, take some time off to figure out what you want to do and work a regular job to make money for now, and start a blog that makes money in the mean time. You just might give up the whole “school” thing once you start making hundreds of dollars per day blogging!
7. Live at home as long as you can
I get that home isn’t the most ideal place to live after you’ve grown up. But financially, it’s heaven! I think you gotta take a real close look at think about what you want to accomplish in your life.
If you want to get rich quickly and be super super wealthy by the time you’re in your 30’s or 40’s, then living at home while you’re in your 20’s is probably something you’ll need to do. Assuming you have good parents who would let you stay for free or for a reduced rent rate, the money you save will add up incredibly over time.
And paying rent sucks. Paying rent makes someone else rich. Getting wealthy is all about building assets. Buying a home and paying a mortgage is building an asset. Paying rent is the exact opposite.
So if you can tolerate being at home, then be at home. Just bite it. The money you save can go towards investing in the stock market, starting a business, or paying student loan debts!