I don’t think I need to tell you how cool it is to be able to live on your own, have your own money and eat only ice cream for dinner. Plus, it’s not just the addition of freedom but the disappearance of grades and other scholarly responsibilities. But what about after the college bell rings? Term papers are a thing of the past, no one is going to miss those. But you might be missing something that’s more important.
I have been observing Reddit lately for fun. Reddit has a sizable portion of early 20-somethings and after a while a lot of the posts sort of repeat itself. Different characters with similar stories and similar concerns. Some of the centralized issues and conflicts seem preventable but easily overlooked. I wanted to attack some of the things at the core because I recall overlooking the same exact things myself.
1. Don’t tick off mom & dad
Our generation’s problem? We all tried to grow up way too fast. Parents are the greatest resource a person has in this world and although we are no longer children it shouldn’t mean our parents will be playing a smaller role in our lives. In fact, this is the time our parents are probably the most helpful. Young adulthood is not a good time to ignore the advice of the elders. Parents, more often than not, have their children’s best interest in mind. OK, they can sometimes be bad at showing it in a conductive manner but ya know, love makes a person crazy.
This adulthood thing is not easy. We need mom and dad to get a good interest rate on a loan or just bunker down with them until things pick up. They are the ultimate backup plan if all else fails and you love them. OK?
2. mentally SUBTRACT by 30%
That’s what I do and it’s as depressing as puppies left on the roadside, but it works. Your dollar doesn’t take you very far and even if your tax bracket is prorated you’re still dealing with sales tax and state tax as it applies. Just knock off 30%. If you make $10/hr, it’s really $7/hr.
3. Don’t put off debt
Debt is one of those things that can easily grow out of control without keeping enough vigilance. The Groovies had a recent guest feature that highlights the danger of compound interest when it’s working against you. Compound interest can be your best friend or your worst financial nightmare so let’s put a hand up to our hearts and make a promise to log in and check whatever is owed – – and start killing it.
Case #1: I had a school chum who owed about $25-30K in student debt. She had just enough in her savings to kill it but for whatever reason she told me that after she submitted the payment she decided to log back in and cancel it. She then took that money and brought a new Volvo. 3 years later, she still has her student loans at over $20K and managed to add-on another $20K on top of that including the Volvo car loan (which is now underwater.)
TFG’s readers are better than that.
4. Consider opportunity cost
This is one of these things where you have to pick your battles. Everything comes with an opportunity cost. Even if you’re young. Opportunity cost is the price of a choice under a particular circumstance where you can only select one and they are in no way mutually inclusive.
T’was a bitter day when I learned you can lose double time. Darn economics. My life was faintly simpler and much less effective before I met you! 😂Dear #economics: my life was faintly simpler and much less effective before I met you! 😂 Click To Tweet
5. Don’t get anything you need to feed
When I was 16 I was so excited about growing up just so I could 1. get my own apartment and 2. a dog. Nope, don’t do it. It’s hard. It’s already hard enough to get an affordable apartment with just you, much less one that allows pets. Plus, they usually come with monthly fees and/or nonrefundable deposits.
What about fish?
Fishes are decorations that we’d have to clean and feed honey.
6. Sell/donate everything you left at your mom’s
When we move out and leave things behind at mom’s, that’s naturally indicative of what we really don’t need.
Shh shh, listen. If you left it behind = you didn’t need it. It’s not because you just needed some money before you can afford to rent a storage unit. You don’t need it. Also, don’t ever pay for a storage unit.
Case #2: we fly back to Northern California every Christmas and Jared’s mom always reminds him to take some of his stuff back to Seattle. That poor woman has been asking for 5 Christmases now and we have moved back maybe 2 boxes out of…20? It like neither of us wants to admit it’s junk. We don’t actually want it but it’s hard to find time to sort and deal with it when we’re stuffing our faces and opening presents. Thankfully mom and dad have a 3 car garage of which all happy childhood memories are stored.
Next Christmas, I’m taking my own advice and clearing out that stuff! I’ll go through those boxes and donate it. It’s mostly Ninja Turtle & Pokémon toys anyways but it might be worth a hunk of change to someone else.
7. Buy stretchy pants
Don’t look at me like that! I’m being realistic. We are probably not going to get smaller, horizontally. The older I get the more I appreciate my sweat pants haha. Clothes are monetarily a dead resource so buy something that’s breathable.
I dug my mom’s muumuu out of somewhere and started wearing it because it was so comfortable. My mom laughed her head off when she first saw me with it on. Apparently that’s all she wore when she was pregnant with me for the same reason.
Mom: “上次我穿着你在我肚子里!” / “Last time I wore that YOU were in my belly!”
8. Calculate your monthly savings rate
It doesn’t matter what we make or how much we save. I just know if I knew my savings rate when I was 19 – I would have been a lot smarter with my money. The goal now is just know where we are and where we want to be. Saving rates are good eye openers.
P.S. saving rate should be monthly but you should budget bi-weekly so it’s not an avalanche of information at the end of the month.
9. Car Insurance is more expensive For the young
Discriminatory bums. Kidding! 🙂 It make good sense. The data shows young drivers get into more accidents on average compared to older drivers. The basic breakdown goes:
- Age 23: $2,602 – $4,020
- Age 24: $2,590 – $3,474
- Age 25: $2,190 – $2,958
The rates go down if you live in a small town and/or if you’re a homeowner.1 If you’re young and you can walk, run, bike or bus to work – you can save a lot of money by going car-free. We live car-free and it’s not always glamorous but we’re saving.
10. Get an email signature
You know how I know this is good advice? I know because I thought it was bad advice before and ignored it. Now I’m a little older and I completely regret not taking two minutes to make an email signature. A signature just make everything more professional. There’s an air of authority around it even if it’s just ‘assistant manager to the assistant regional branch manager at Foot Locker.’ Think of it like “I have a life. Look at all the stuff I’m up to.”
A good email signature2 has all your professional websites / LinkedIn / position uploaded but should have none of the above ^ 😂
You can get a free signature from Wisestamps.
A tip to go with your email signature — when sending an email with a resume for a job, create the message in Word. Enlarge the font, run spell check and proof it 3 times. You’ll catch mistakes like using “their” for “there” and missing words altogether. Fix the text in Word and copy it into the body of your email. – Mrs.G
11. Find a frugal partner
This is so important I can’t even begin. I would do an interpretive DANCE about the effect of money on a relationship but you can’t see me. Do you know how much relationship advice I dough out that is based in essentially an argument about money? This should be #1 on the list of preferences for potential mates. I’m not a believer in romance or courtship. I believe in what’s practical and money is very practical especially if there’s a chance you will be sharing a roof with the person for the rest of your natural life.
Case #3: She wants a nicer apartment because for 2 people in their mid 30s who has decent money, they shouldn’t have to live like college students. But he doesn’t want to toss money on a rental apartment – he wants a better retirement than a better apartment.
12. Balance your Smartphone apps to 50/50 leisure and practical uses
There is absolutely nothing wrong with leisure apps like Snapchat or Instagram but it would be nice if we kept track of the apps based on less what Kim K is up to and more brain food. Some practical apps are Google drive, library (in Seattle they partnered up with Overdrive)/Kindle, dictionary, language app. budgeting app, and financial apps (Bloomberg, SeekingAlpha, Robinhood etc.)
13. Libraries still exist and ARE awesome
Things in life are rarely free and this is not free. Your taxes are paying for it so you should definitely use it. Remember the 30% pay you cut out? That’s the tip you pay for services like libraries and buses and playgrounds. Take advantage of those things! I’m all for knowledge but I’m not willing to fork $10 for a piece of bad fiction (I’m picky). I don’t want nerdy buyer’s remorse.
14. You can push the expiration Date on some things
Not everything but most things. Not milk but yes to cereal. When I go to the store I check the discount meat rack and the discount bakery rack. Frugal or cheap depends on how you land in your way of thinking. I do notice some people are embarrassed to look at the discount rack so they steal glimpses by walking near it. I just waltz right over, proud as the day is bright, with my cheap self and poke around. These things are usually 30%-50% off regular priced items because they’re about two days old. Hey, I’m still alive and kicking.
15. Mind Your credit score
It’s basically the grown up version of being graded. It’s the official transcript & SAT score you send off to colleges to prove you’re not a total screw up. “Mmm how has this person fared in the Life class, let’s see the scores.”
Thankfully, no one has to study for it. Just be mindful of your spending, watch out for ID theft and make time your friend.
P.S. if you have student loans (considered installment loans) you can improve your credit score without a credit card. Time and consistency of payments are the best ways to build your credit.3
16. Don’t wait to start exercising
It is easier to build the habit of exercising when you are young, strong, flexible and energetic. – Grant
17. Get Roommates
Learn proper nutrition early on because your weight will creep up in a hurry once your metabolism starts to slow down. – MSM!
19. Budget Traveling
There are a ton of resources out there (cough like AirBnBs!) so shop around 😉 – FM
I may have overlooked a few other things but this is just a collection of the important stuff. I write in chronological order or something because I’m still in age 19 phrase haha. What’s your favorite money/finance app?!