The Long Term Trick to Earning More Money in Your 20s and Beyond

Let me preface this by saying that I am very aware the amount of money you make is largely determined by the field you’re in. If you have your heart set on saving the whales for a living, you may never make as much as someone working in marketing for a national firm. But that doesn’t have to limit you to the paycheck-to-paycheck lifestyle.

In five years since graduating college, I’ve managed to go from a $35k/year job to a $120k/year job. Do I deserve this income more than anyone else making less than me? No. Will this income remain stable for the year’s to come? I haven’t the faintest.

But — one thing I’ve learned is that, while it’s easy to accept scraping by in your 20s, you should live like you need more money TODAY so you can save for later. When you interview for jobs, they can’t ask if you have children… or an expensive mortgage… or debt that you need to repay. If you’re in your 20s and single with little or no debt, you may tell yourself “I’m doing fine on $35k” and then you wonder why you are having trouble saving any money for retirement or anything else. Live like you need $20-$30k more a year to get by, and pursue your salary – not your lifestyle – based on this white lie. It will give you that extra motivation to negotiate for $5k more a year, or $10k more a year… which adds up over the long term.

The trick to earning more money long term is setting savings goals for yourself. You may not always hit them, but having a number (even one that seems impossible to reach) in one’s mind shifts the way you go about living. When you’re looking for a job, you’re willing to negotiate for the extra pay because it’s one of the only ways you may ever reach your goal.

I read that you should have as much in savings when you’re 30 that you would like to have per year when you retire. My goal is to have $100k in savings by the time I am 30. At my last salary rate, this was looking quite unlikely. I have 3.5 years until 30, and I’m only at $55k in savings right now.

When I got laid off at my last job, I applied for a lot of different positions, all which had varying salary ranges. Some paid really crappy. I knew I needed something, and I knew I could get by on the crappy pay. But I wouldn’t hit my goal of having $100k in the bank by the time I’m 30. So that fueled my job search in a different way.

The other day I was talking to my boyfriend. He thinks I’m “rich.” He has an $18/hour part time job and hasn’t tried to get anything better. He has no benefits. (Well, neither do I, but I can afford them on $120k and still save.) He told me about his friends who are trying desperately to find a $30k a year job. While I’m by no means arguing that you shouldn’t take a $30k per year job if you find something that you’d love or it really is the only option, by realizing you are worth more (or at least telling yourself you can convince someone to pay you more… and that you are going to save the money) probably increases your long term earnings.

Let me put it this way… I could easily be still making $50k or less, and I’d probably be just as happy NOW. But, later, I wouldn’t have much in savings, and I’d be really upset that I missed out on the opportunity in my 20s to put a lot of money into savings and let compound interest work its magic.

If you can’t make more money at your current job or in your field, get a second job, but just live as if you “need” more money to survive BEFORE you actually do. I’m freelancing on the side of my full time job because I know now is the best time to earn income. Later when I have a family I won’t want to sacrifice the extra hours of living to be at the computer… but now, there’s lots of time to earn money and then save that money for the future.

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3 thoughts on “The Long Term Trick to Earning More Money in Your 20s and Beyond”

  1. I like the idea behind this advice. I also agree to an extent. On the other hand, it's not just career choice that will determine the amount that you make, but geographic location as well. I live in Kentucky. Granted, our cost of living in Eastern Kentucky is substantially lower than it is elsewhere, but then again, so are our salaries. We probably even out. A $120,000 per year job to you is more like $60,000 per year here. So while it's highly possible that I would be able to accumulate a tidy savings within the next couple of years, it's not likely that I am going to be able to save $100,000 within the next 10 or even 15 years. I've had a variety of jobs over the past 10 years. I am now 30 years old. I hold a bachelor's degree and a master's degree, as does my husband. He teaches at a state run university. His salary? Around $20,000. He also works full time at a law firm as the receptionist. His salary there is $10 per hour. He does not get benefits from either job. I freelance and last year earned $20,000 from it. The year before I worked as a glorified social worker, and with my master's degree was able to earn the top pay scale-$28,000. The top social workers in the state make around $40,000 and they are government employees. (I'm not going back into that field, but thought I would give you an example of the salary.)I used to work as an adminstrative assistant at a non-profit organization. It required a bachelor's degree. My salary was $9 per hour. The executive director only made $65,000. So the savings thing is kind of relative. At this point, we only avereage around $2,000 per year in savings, but that mostly has to do with the fact that my student loans are $600 per month and my husband's are even more. (He's from England and the exchange rate kills us.) We live well within our means and budget to the last dime. We also have a 3 year old and one on the way. I work about 45 hours per week and with my husband working 2 jobs it's just not possible to work any harder. Oh, and as far as trying to find "something better", well, this is kind of it. Our county has a 16% unemployment rate due to lack of jobs. The 5 neighboring counties are faring only slightly better. It took him 2 years to get the university job and a year and a half to pick up the second one. Out of 150 resumes and applications he filled out, he got 3 interviews. Not complaining, mind you. We love where we live and we accept that we are going to have smaller salaries and less opportunities here. On the other hand, we also have 150 acres, good schools, family nearby, and a nice way of life so it kind of evens out for us.

  2. that was the most ridiculous thing I've ever read! Sorry, let me explain…In a past job, I was the hiring manager at a Fortune 500 company. I once interviewed a guy whom I thought would be PERFECT for a job opening we had. When I called him back for a second interview, he knew he was golden. At this time, he upped his salary requirement by $5K. Just a measly $5 K. Nothing really. We were already planning on hiring him at the top of the salary range, but he got greedy. His adamancy about needing an extra $5K knocked him out of the top three. A week later, he sent me emails and letters, and called me apologizing for asking for that extra $5K and BEGGING (yes, a grown man begging!) for another chance at the job. He even said he would take $10K LESS than his ORIGINAL salary requirement. But by that time, I already hired someone else.No offense, but you are still a kid and have a lot to learn. Don’t get me wrong, you are way ahead of most other 20-somethings (not hard to do in this day & age, though!), but be careful about advice you are giving (or taking). Also – you could reach your $100K goal MUCH easier if you moved to a place with a lower cost of living. And you wouldn’t “need” a salary of $100K+ to do so, either. It’s not about how much you make….it’s more about how much you SAVE. I’ve read through some of your blog – you could save SOOOO much more on a salary HALF of your current salary if you were willing to move somewhere besides CA. AND you could have health insurance, go for the MBA, and own a home while doing it. COL in CA is crazy. $120K/year in CA is the equivalent of $45K where I live – hardly anything.

  3. HI, it's ANON #2 again…with another point/question. Do you have a net worth goal you are aiming for by the time you are 30? Don't you think NET WORTH is a better goal than just "savings?" I keep track of mine yearly. I just looked back to what it was when I was 30. I did NOT have $100K in the bank then, but the net worth was $170K. And we already had 3 kids and a stay at home parent (i.e. a family of 5 living on ONE salary…half of yours. If we didn't have kids, we'd have been millionaires by 30-35 – and I'm not exaggerating! But life is not all about money 😉 ). You do make a good point about saving while you are young though. We started at 22 – but not as diligently as you are. Wish we could have been more serious about it earlier. If so, we could have been looking at retiring at 45, instead of 55.

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