10 Financial Commandments for Your 20s, Part 2

This is part 2 of a series inspired by Give Me Back My Five Bucks, based on a Kiplinger article of the 10 commandments for finances in your 20s… I’m grading myself on each one of the commandments. Read Part 1 here.

6. Establish credit. In order to qualify for the best interest rates on a credit card, auto loan or mortgage, you need to start building a solid credit history. In fact, a good history can also save you a bundle on your auto insurance or help you land an apartment or a job (see Why Your Credit Score Matters). Building a good credit history in your twenties will ensure it’s ready when you need to use it. If you didn’t have a credit card in college, one way of getting credit now is to apply for a secured card: You make a deposit — usually $300 to $500 — in a savings account as collateral, and you can get the money back after one year of using the card responsibly. You can also start building a credit history through www.prbc.com, an alternative credit bureau that gathers data on regular payments for rent, cable and other recurring expenses. (See Rent Your Way to Good Credit to learn more.)

Score C. I’ve never made a big purchase on a credit card and paid it off slowly, so my credit score is not as great as it could be. That said, I’m totally opposed to how you need to carry a balance in order to build credit. I do have a credit card (ok I have a lot of credit cards) but I don’t have a lot of recurring expenses.

7. Have a marketable skill. “Your own earning power — rooted in your education and job skills — is the most valuable asset you’ll ever own,” says Knight Kiplinger, editor in chief of Kiplinger.com. Your twenties is the time to invest in yourself to acquire those skills that will start your career and boost your earnings. It’s also a good idea to start building and maintaining a network while you’re young. Personal contacts can come in handy to further your career or even enhance your personal life.

Score: B+. I’ve made a bit of a name for myself in social media, I have a book deal in the works, and overall I continue to surprise myself on how I continue to up my earning power without putting enough effort into trying. I’ve figured out that in this day in age the most important thing is to have your own brand, and own it. In marketing especially, you’re worth more if you’re a well-known brand, in addition to having the skills to deliver results. I’ve focused my 20s on building my brand, both on purpose and accidentally, and hope this sets me up to a 30s where I can, at the very least, work as a consultant and have flexible hours once I decide to have a family and settle down, without sacrificing income or income growth.

8. Cut the financial umbilical cord. You have your own apartment and your own paycheck. You may even have your own spouse and children. Isn’t it time you grew up? If Mom and Dad are still preparing your taxes, balancing your checkbook or managing your investments, consider this: Whoever controls your finances controls your life. The desire for parents to help their kids is nothing new, as is the desire for kids to let them. Just don’t let it get in the way of learning to succeed financially on your own. Your parents aren’t going to be around forever to help you out. You may also reach a point in your life when you don’t want your parents to know the intricate details of your finances. Start now to cut the cord. We’ve got four tips to help ease the transition.

Score: A. I’d give myself an A+, but I don’t think that’s fair since mom and dad paid for my college, and I have no loans thanks to them. Also, despite my current income and networth, I always feel like if shit hit the fan, my parents would be there to help me out. They aren’t rich or anything, but they wouldn’t let me starve. I’d really like to get to a point where I don’t even have to think that way. I’m sure at some point fairly soon that story will reverse anyway, as my mom doesn’t have enough money to keep living the way she’s living, and if my income increases she’ll probably turn to me to be her financial cushion in case her shit hits the fan. I guess that’s only fair, given I really owe my parents $100k for my four years of undergrad. I’ll only feel completely financially independent the day I have saved/earned enough money to pay them back for it. They’ve never asked me to do that, but I’d like to be able to.

9. Marry wisely. You and your spouse create the most important team in your life. You’ll want to make sure your team works well — and shares similar financial values — so you can work together toward common goals. Money can drive a wedge between even the strongest of couples. So choose a spouse with whom you can keep communication open, avoid keeping money secrets from and regularly assess your goals and progress. (See 10 Questions to Ask Before Saying ‘I Do’ to make sure your union is on the right financial track.) And, of course, it helps to base your marriage on something deeper than physical attraction. Divorce is costly and can derail even the best-laid financial plan.

Score: D This is a hard question to answer. First off, I’m not married. But I am in a nearly 6 year relationship with a guy who makes me happy. Is he the wisest financial decision of my life? God no. Do we share similar financial values? Kind of. I’m definitely more of a capitalist than he is, and with that I have more of a drive to get promotions and increase my earning power. He’d be happy as long as he can pay the rent, eat out on occasion, and buy books. Will he put us into massive debt buying something we don’t need? No. Ultimately I’d rather be with someone who is more financially conservative than a guy who makes a lot of money and spends it like the world will end tomorrow. I constantly hear my mother’s voice in my head with her complaining about how she wish she married someone with more money (my dad made $200k+ per year in his last years of work, so it’s not like he was a blue collar worker) and I also constantly wonder if I’m stupid not to find someone who will at the very least earn a six-figure income. Then I kick myself and remind myself the only thing in the world that makes me truly happy is the comfortable love we share. The feeling of being held by him when we watch old episodes of our favorite TV series in his shack (he lives in a free-standing structure with no insulation) is probably the best feeling in the world. If I want to buy nice stuff, it’s all on me. I’m a little worried about a joint bank account concept later on, as well as how we’ll work out paying for kids, but I think we’ll be able to deal with that… as long as I continue to make a good income.

10. Have some fun. Personal finance doesn’t have to be boring. Taking the time to travel and have new experiences before you have a couple of cranky kids in tow is not only easier, it’s cheaper. Consider a semester abroad in college. Seek out inexpensive entertainment close to home. Take a class just for fun. Or take advantage of cheap travel options such as youth hostels, camping and off-season travel deals. Build some memories, meet new people and try new things. But please, don’t go into debt to do it. Save up ahead of time and you’ll be in prime position to make the most of your thirties…

Score: C I probably should give myself a higher score here. After all, through my various jobs in the past five years I’ve been able to travel the world (including an all-expense paid summer in London), attend fancy events, and do a lot of things that other people would consider fun. I’ve had a lot of opportunities to create memories, but my social anxiety and other anxieties have turned times that should have been incredible into times that were not really all that fun. I don’t really have fun anymore. I used to perform in community theater and that was fun — but my career makes that impossible these days. I have fun seeing my networth go up. I have fun blogging about all of the stupid things I’ve done with my money, and have lived to tell about it. I don’t really have time for other fun. I’d love to take a painting class. I’d love to go to a resort in the Caribbean and stare at the ocean all day with someone else who would appreciate it as much as I do. But there’s no time for that kind of fun right now. Fun can come later. Fun can come after I have $500k in networth. Fun can come when I figure out exactly what fun is. That said, really the most fun I have right now is at work. The people I work with are just hilarious, it is wonderful to be part of a startup where everyone is really working together to reach the same goal. It’s exhausting, but I’ve never had this much fun before. If I have a lot of free time I just get bored. I would like to focus on having a better social life, but who has the time when you’re on a plane every other week to go to a conference? And who cares if you rely on work for your fun?

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