12 sage pieces of Financial advice for your 20s

financial advice for 20s

How many of us really pay attention to money in our 20s? It’s a crucial age where our financial decisions can impact our financial future the most.

We often get advice on how to find a partner, what to study, what career to pursue etc. But how many of us have had someone who’s more experienced provide sound financial advice for our 20s?

After surviving through so many financial mistakes, I’ve gained a lot of financial wisdom that I’d like to share with our younger readers. If I could go back in time, here are a 12 pieces of financial advice I would give to my 20 something year old self:

1. Finish your education. It will give you more earning power. 

Many people overlook the power of higher education. It can dramatically increase your earning ability when you enter the workforce.

Sure you’re bored in school now, but wait until you’re in a dead end job that you can’t stand but you’re afraid to lose. Getting finished with your degree will open up many more opportunities than you realize. So stay in school. Don’t quit.

I always wanted to go to law school, but without that sheepskin, I didn’t have a chance of even being considered.

The lesson learned here is finish what you start by throwing yourself into it fully. Treat your college experience as if it were a job. Arrive on time, do your homework, study, and treat your learning process as if you were at a real job.

2. Start investing early. Money compounds over time. 

Investing early is one of the best pieces of financial advice for someone in their 20s. The earlier you invest, the more time your money has to compound and grow. Each dollar you invest will be worth 2 – 3x that in two decades.

So even if you’re getting minimum wage now, just know that you’re really earning 3x that. Of course, that’s if you invest the money.

How much stuff do you have to show for the money you made in high school and college? If I had invested half of what I made during those years in a plain old, broad based mutual fund, I would have well over $192,000 with no other investments made since then. I’m still kicking myself. Invest early.

3. Buy your first home in a good neighborhood. 

Have you heard of the phrase location, location, location? Homes get a lot of their value from where they are located. That’s why you should go for a house that’s in a premium neighborhood.

You might not get a house that is as nice looking. But don’t worry. Even when the facade decays, you’ll still be sitting on prime real estate that will go up in value.

Your first house will likely be one of your biggest assets. It has a lot of potential to build wealth for you through capital appreciation. So take time to choose the right asset!

No, I didn’t actually do this, but it was close. We were so excited to be approved for a mortgage. We came out of Consumer Credit Counseling Services and jumped at the first house we found that met our minimum requirements.

I still love that house today. But I wish we had gotten a better inspection, had looked into building, or had found a way to buy a house that was closer to work and school. The lesson learned: don’t be desperate with a large purchase.

4. Live within a budget.

We’re never as careful with money in our 20s. We have few financial obligations and it seems like the money will keep flowing in as long as we keep working.

However, your 20s is a prime time to start building healthy financial habits like living within a budget. You need to be consistently putting aside money for a rainy day. The proverbial happens. A medical emergency could limit your ability to work. Repairs around the house might eat up your paycheck, leaving nothing left to pay the mortgage.

Sticking to a budget is the solution to all of that.

Could anything be more important to insure you are living below your means? I tried on several occasions but I was never as faithful to this ideal as I should have been. Today, I make a salary high enough that a budget is a “yeah, we really ought to do that” kind of thing. My goal is to get that done. If I could do it over I would get myself in this habit at the earliest possible age. The lesson learned: budgeting is a freeing process, not a limiting one. If I had lived on a budget, I could have circumvented many painful events.

5. Negotiate for a better deal on everything.

Imagine you had a skill where you were paid whatever you asked for. Yes, that’s the power of negotiating. Prices aren’t always set in stone, especially for large purchases that involve commissions for a salesperson.

Businesses would rather make a sale than sticking to a price. In fact, some businesses even factor in negotiations into their prices. They expect your to bargain down, so they price their goods just a bit higher. Imagine how much you’re losing out on by paying full price!

Some people don’t like the idea of haggling. But it doesn’t have to be adversarial. You and the salesperson are both working towards the same goal: making the sale. Help them understand what it would take (i.e. how much of a discount they should give) to get you to buy.

You’d be surprised. The mere act of asking for a discount might help you shave a few dollars off. Saved $100 on a car? Maybe not too impressive. But add the savings over a lifetime of purchases and you could be looking at thousands of dollars saved.

That’s why this is one of the best pieces of financial advice you can get in your 20s.

And look at it this way: if the dealership paid you $100 to compensate for your discomfort of asking for a discount, would you do it?

Having read several books on negotiation just a little too late, I’ve recognized how I was duped by many people, mostly used car sales people. I wrote a review on Secrets of Power Negotiating that you can read here.

Learning these skills would have saved me thousands. The lesson learned: prepare by educating yourself and always be willing to walk away.

6. Never let your medical insurance lapse

Always keep you medical insurance in force. Why? Murhpy’s Law – whatever bad can happen, will happen. You’ve paid your insurance premiums for a reason: to cover the cost of a medical emergency.

The word emergency indicates that it will happen unexpectedly. So why try to tempt fate by letting your medical insurance lapse?

Several years ago, I quit one job and took another that didn’t offer medical insurance until you had been there for 90 days. You guessed it, my wife had to have emergency surgery at 89 days. True story. 89 days. Do you think the insurance company cared? I’ll let you guess.

Thankfully, we were at St. Vincent’s Hospital and they had mercy on us. The business manager told me (after looking over my financial situation) that someone paid our bill. I still get choked up thinking about it all these years later. It took us years to pay off the doctor and anesthesia bills, though. If I had just kept my coverage in effect for a little while longer. The obvious lesson: keep that insurance in effect. It is cheaper than the medical bills.

7. Find an employer that rewards productivity, rather than time in the office. 

There are many better things to do than spend time in the office. Many employees stay in the office longer than they need to for “face time”. Meaning that you show your face in the office, hoping your boss will see it and think you’re working hard.

The fact of the matter is this: more hours in the office doesn’t mean the business makes more money. Productive time makes money.

Find a boss that understands this and rewards productivity rather than face time. That will free you up to do more important things like spend time with your family. People who don’t get to spend time with their family try to compensate with expensive family holidays and flashy toys. If you’re at home with your family often, you won’t need all of that.

Your boss really doesn’t care whether you have a family or not. Trust me. Unless you work for family members who DO understand that you need to pick the kids up early, or that you DO need to spend some time with your spouse, you are just a replaceable cog in the machine.

When people are trying to grow a business, your need for personal time is secondary, so is the quality of your marital and family relationships.

Just remember that when you’re old, sitting in a chair at the nursing home with a blanket on your lap and eating mush, you won’t regret that you didn’t get to spend more time at the office. The lesson learned: family will be there after the job is long gone. Value and treasure them.

8. There’s no shortcut to wealth.

NEW FLASH: there is no shortcut to wealth. Might as well get that out of your 20 year old head right now.

That doesn’t mean you can’t make a lot of money in a short amount of time. It just means that there’s always a sacrifice that must be made. That sacrifice might be time – working on your side gig after work hours. It might be effort – pushing your comfort zones and making sales. It might be ingenuity – inventing products and services that people love.

Anyone who tells you that there’s an easy path to wealth is banking on giving pseudo financial advice to people in their 20s, hoping that they’ll be naive enough to buy their new money making course.

Wealth is created when you provide something interesting, unique and valuable to people who demand it. Until then, you will be trading hours for dollars and you’ll always think you’re underpaid. “Find a need and fill it” is the old mantra and it is still quoted because it’s true. In today’s world it should read “Create a need that only you can fill.” Then you’ll be on your way to wealth. The lesson learned: figure out where there are unmet needs and figure out a way to fill those needs.

Stay far, far away from any Multi Level Marketing “business” that requires you to sponsor new distributors. They are all scams. You are not “CEO of your own distribution network”–you are a commission-based salesperson relying on the liquidation of your social capital (i.e. alienating your friends and family) to make any money at all…and 99.5% of people in MLM’s lose money, as has been shown again and again in numerous studies.

The only profit you can ever make is by turning what would be called “customers” into “distributors” and then taking the money from the 99.995% that lose money in the organization and giving it to the 0.005% at the top (the people who started the whole “business” in the first place). Stay away!

9. Make sure your spouse’s values line up with your own.

After you’re married, you’ll never make financial decisions alone. What house to buy, where to go for a holiday, whether you should take that job – all these things are made in unison.

That’s why you must find a partner that shares your values, financial and otherwise. What are their opinions on sacrificing some comforts now so that you can afford an earlier retirement? Do they see the value in creating budget?

If your spouse can’t develop the financial savvy and discipline required for financial freedom, then you’re going to find yourself in a bind whenever you make a financial decision.

Listen when I say this: this one step can single handedly determine your level of happiness more than just about any other.

Scary isn’t it?  Work these things out before you say “I do.” They say love is grand . . . and divorce is 50 grand. The lesson learned: talk to your spouse or potential spouse about what is important to you and the values you think should be taught to your children, even if you don’t plan on having children.

10. Learn how to network.

They say that your network is your net worth. A simple but sage proverb. And certainly great financial advice in your 20s, even if it doesn’t seem like it at first glance.

You’re surrounded by people with resources, whether its expertise, money, or their own network. Wouldn’t it be great to be able to call on these resources when you’re in need?  If you’re looking to build a business, or get ahead in your career, your network will play a huge part in building money in your 20s and beyond.

Learn to stay in touch with old friends from high school and college. Learn the skill of asking for help without seeming to be asking for help. Watch how others network.

Remember it’s not what you know, it’s not even who you know, it’s how you USE what you know and who you know. One step further, it’s not who you know, it’s who knows YOU.

Get in the practice of networking without expecting anything in return. Make sure you don’t come across as a brown nosing leech who is always trying to get an angle, but stay in touch with people. You never know who you may be able to help. The lesson learned: stay in touch and make sure you come across as helpful rather than helpless.

11. Never accept a job just because the pay is higher.

Most young people entering the workforce make the mistake of taking the job that pays the most.

One mistake is that they often just look at basic salary. What you should be doing is to look at your total compensation. What are you going to get in terms of bonuses, stock options, medical benefits? These oft ignored things make up a big portion of what you’re really paid.

The second mistake is that people don’t consider how much time they’ll have to put in to the job. Even if you’re 2x more than your peers, are you working 3x longer? In which case, you’re earning less per hour! I wish someone have given me that financial advice in my 20s.

Always ask where the person who last held the position is working now. Ask to speak with them, but always do it away from the office. People will give you more information outside of the office than inside. Inside the office, they’re committing treason, outside, hey – they’re just chatting with a friend. The lesson learned: Get the full scoop before jumping out of a frying pan into the fire.

12. Trust, but verify.

You must make large decisions very carefully, because mistakes are very costly to fix.

When you hear a hot tip on a stock that’s about to skyrocket, do you do independent research or listen to what the talking heads are saying? If you did that for bitcoin, you could have been seriously burned.

Same for buying a house. Will you let the real estate agent tell you that everything is fine and well? Heck no! Bring in your own independent inspector and valuer.

You can’t believe everything you hear, read, or were taught as a kid. You should always check references, ask probing questions, search out answers, and find ways to learn more about what you’re being told.

This is a catch all but it is important. The world is full of schemers who are just waiting to take you for a ride. They especially thrive on giving questionable financial advice to people in their 20s.  Don’t become cynical, but verify everything you can. The lesson learned: make sure you know who it is you’re dealing with and what their motives may be.


So there you have it, financial advice for your 20s. Even if you’re past that age, some of this advice might still apply to you. It’s never too late to start acting on good financial advice.

What would you tell yourself if you could go back twenty years?