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Your Take: Your Best Money Tip for Young Professionals?

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This morning I broke from routine and posted a book review about Kim Palmer’s Generation Earn, rather than going with my typical Friday morning Your Take post. her book was being released today and I thought it would dovetail nicely into a mid-morning Your Take asking you for your best money tip for young professionals.

My best money tip for young professionals is to enjoy yourself. Use the first few years out of college as a way to explore who you are, what you want to do, and where you want to be in twenty years. The standard advice of saving for the future, your retirement, and all that jazz is great but you want your early twenties to be about exploration, not careful deliberation about interest rates and where your next dollar goes. That’s not to say you shouldn’t be smart about money. You definitely have to be. Don’t rack up credit card debt, save for retirement, but be sure to spend a little time exploring what you want to do and where you want to be.

When you settle down, get married, buy a home, and start a family, you lose a bit of the flexibility. Marriage is wonderful, owning your own home is exhilarating, and I’m sure starting a family is very rewarding… but make sure you spend enough time on yourself so that you’re ready for those big events when they come.

What is your best money (or life) tip for young professionals?

{ 39 comments, please add your thoughts now! }

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39 Responses to “Your Take: Your Best Money Tip for Young Professionals?”

  1. PokerCat says:

    My best advice to a young professional is to marry well, and make it forever.

    I’ve seen too many friends (both male and female) take horrific haircuts when the assets were divided up after a divorce.

    • aua868s says:

      wonderful tip….mine was an arranged marriage. I could not have made a better choice if i had chosen one myself (NOT implying arranged marriage is better!)

    • mikecancook says:

      I totally agree with this. Who you spend your life with has a huge impact on your financial outcome.

      I think in the book the millionaire next door, Stanley talks about that if your spouse is more frugal than you, you will most likely be financially successful for the rest of your life. The impact of who you choose as your life partner cannot be more important.

  2. Jon says:

    If you are married with no kids…live off one salary and save the other

    • Lisa Morosky says:

      Agreed.

      My husband and I got married when I was 21 and he was 22 (3 years ago). He’s in school, leaving me as the breadwinner until he graduates in August as a chiropractor. We’ve gotten very good at (and comfortable with) living on one income. Even when we’re earning much more than we are now in the coming years, we’ve already decided to live on one person’s income (or a portion of that one person’s income)…even when we have kids.

  3. tom says:

    Read something.

    Blogs, investing books, whatever.

    Don’t be stupid by racking up debt, investing in dumb products or not investing at all. Reading about financial topics will help prevent this.

  4. Julie says:

    Pay off your credit card in full every month, no matter what and without fail. If you know that won’t be possible, don’t make the purchase.

  5. SSR says:

    Start saving early and don’t get into debt. Enjoy life and try new experiences until you find what you like, but never stop saving money.
    Simply don’t spend more than what you earn and you will never regret having save money; specially during the bad times when you will need it.

    • live green says:

      This is exactly what I was thinking. Make sure to save and start early. This includes investing in retirement vehicles, especially a Roth, as early as you start working. This doesn’t mean you can’t enjoy yourself, but you just don’t have to waste your money like so many other young professionals do.

  6. neerpatel says:

    Subscribe to Bargaineering’s newsfeed and read it!! I started reading it several years ago, when I was trying to figure out what health insurance to get, and I haven’t missed an article since!

  7. DIY Investor says:

    Read the book explaining your benefits as many times as you need to to completely understand them.

  8. billsnider says:

    When i got out of college, I immediately bought a really nice car. Then i found myself with high payments, high insurance and state fees. I also got hit soon thereafter with repair bills and upkeep. It drained me big time. I found out that i was wearing cheap clothes, eating crap and living in a cheap place in order to afford the car.

    My next car was cheap, and i have lived comfortably after that.

    Second thing i would say is get educated about finances.

    Bill snider

  9. Get a job (or start a business) and figure out what you enjoy. Don’t be afraid to take chances in your career.

    The most important thing is to identify what you’re passionate about, and then find a way to make money doing it!

  10. Mike says:

    If your parents are ok with it, don’t move out of your house until you’ve saved up a good amount off cash and paved off some of your debts.

    Credit cards a good way to build up your credit. I used my credit cards responsibly and built up a great credit score. I always get great rates at the banks.

    Don’t have kids until you’re sure you and you’re partner are ready for it. My supervisor has almost nothing for savings and IRA because he has five kids to take care of. I make way less and I have 4 times as much saved up already.

  11. WR says:

    My number one bit of advice would be to find your bliss and follow it. Don’t worry about money. Think about what you love doing. How your talents, desires and skills can be put to work to help others.

    As for the strictly financial answer:

    Adopt a ‘financial independence’ persona. Approach everything with a long term wealth mindset.

    One key way to do this is to wear the mask of frugality. Pretend to be frugal. Buy used and invest the difference. Shop at yard sales and on craigslist. Drive a pre-owned vehicle and buy a (very) modestly priced home.

    Your biggest asset will be the long term habits that you adopt. Go slowly. First, build up a solid 6-month contingency fund. (keeping in mind that the lower your expenses are, the less this needs to be)

    Give a percentage of your wage to charity, a percentage to long term investing (think 401k/IRA) and a percentage towards following your bliss. The numbers can be small at first, it is the habit that counts most.

    Remember that Debt is self imposed slavery, avoid it like the plague. If you can’t pay cash for something then get creative. Find, build or borrow an alternative or go without. Attics and garages are full of dust-covered junk that people are still paying for…with interest.

    Most of all, have lots of fun. In 10 years, after living with positive financial habits, the sun will seem to shine brighter and you will exhibit a quiet confidence that you chose the right path.

    Best of luck!

    -WR

  12. My best advice to a young professional is to figure out what you REALLY want to do with your life.

    I know many of you just got out of college and you think you have it all figured out, but don’t be afraid to tinker with your career and find something you like to do, rather than just pays you to do.

    Life is far too short to spend 5/7 of your life doing something you don’t like doing. Now is the time to figure out what that is.

  13. Josh says:

    Bargaineering always has great posts but this is by far one of the best I’ve read.

    I’m a 25 year old recent college grad with roughly $50,000 in school loans and have been reading this site for over 4 years and I don’t know that one post has ever rang more true or brought more thought than this one.

    I love everyone else’s suggestions so far but I feel like they are the same ones young people here over and over again. No matter how many sites you visit or how many finance books you read, they all seem to have the same message. But this one is different, this one strikes home a bit more.

    I’m young…but I sometimes feel like I’m not always living in the now, but rather always looking to the future. Which debt do I start with, am I ready to settle down, tired of ‘wasting’ money on renting (I know this is different in todays economy) and be able to buy a house. It is the exact time in our lives when we should be trying new things, exploring, and discovering who we are and what we want to do with our life, before it becomes more difficult. And for some of us, hopefully that means finding a way to get out of the ‘Rat Race.’

    Thanks for the great post Jim and putting out some great advice as always!!

  14. Martha says:

    If you have the ability, take some time off between school and a job and travel. Go to places that aren’t the usual touristy places. I’m always thankful to live in the US after seeing where else I could have been brought up! Plus, you’ll only have a few times in your life when you can travel for longer than 2 weeks/year!

  15. WRXTuan says:

    As a 24 yr old, my two advice I would give to people my age is live below your means and don’t buy things, buy experiences.
    Just knowing that you are not living paycheck to paycheck while others (in my case, fellow co-workers) do is just an amazing feeling.
    On the buying topic, the best way to explain it is that I can cram my place full of DVDs or things and not use it after its ‘instant gratification’ or I can spend a month in South Africa this past summer for the World Cup and made memories that would last a lifetime.

    • Bruno says:

      Interesting that you said that, you’re preaching to the choir here. I’m actually 24 as well, and last year, I saved up all the money I made from work and put it towards going to the World Cup as well! And yes, I couldn’t agree more, an experience of a lifetime. These are the things we really live for, not the instant gratification of materialistic items; There will always be a new apple toy or high-tech item hitting the market.

  16. puppy says:

    Save for retirement and never withdraw or borrow from this account/ You will feel safe and proud of your decision when you retire. I do.

  17. Shirley says:

    Pay as you go, build up experiences and memories that make you feel good about yourself and what you do, and always, always consider consequences and have a goal.

  18. Hi Jim,

    my best advice for young professionals would be to read Robert Kiyosaki’s book, The Cash Flow Quadrant. I believe this book can help them understand the 4 major ways income is earned. Each of the 4 groups in the quadrant has a different ratio of freedom over security. When they match their values in life with one of the 4 groups, they will instantly know what direction they want to follow.

  19. Loren Chiyo says:

    As someone who started in the work force late (27 was when I got first “real paying” job), I’d say that your 20s is a great time for self discovery.

    HOWEVER, I’ve personally found that you actually need “some” life experience that you’ll continue racking up in your 30s to gain better insight to yourself. I’m closing in on 40 and as I look back now, my 30s is when I truly gotten close to the core of what I want my life to be about, because now I have more experience and lessons learned. Back in my 20s it was truthfully a series of mostly lucky guesses.

    That said, you can do a lot of self discovery for free. Read different books, travel, try different things – and these do not have to rack up debt and expensive bills. You don’t want to find yourself – and then find yourself knee deep in debt for finding yourself.

  20. Pedro says:

    My tip would be to enjoy life with your money while in your twenties and once you start to have kids in your thirties start to save and invest some of your money in a tax sheltered account like an IRA or 401k. Watch the money grow tax free and keep the tax man at bay for at least some of your hard earned money.

  21. Pinchapenny says:

    SAVE,SAVE,SAVE,SAVE,SAVE. Do not waste buying things, spend any extra cash on experiences. Go to places that you have wanted to see, and do the things you have wanted to do. It doesn’t have to be a trip to Europe every few months but experience the local outdoors. Invest what you have saved. Oh and last but not least, cut up the credit cards.

  22. Eli says:

    Learn how federal student loans work and time a consolidation to lock in low rates. Locking in a low rate can have huge positive consequences on what could be the largest lifetime debt besides housing. Make sure to make your first 12 payments on time to lock in rebates. Sign up for auto deduction from your checking account to lower your rate. But most importantly, follow the annual rate announcements and consolidate when it makes sense.

    We were fortunate enough to consolidate at 2.625% for 25 years.

  23. Raymond says:

    Start out paying yourself first. Save as much of your money as you can and invest it in different classes of assets. Real estate might be bad now but it will always be the best type of investment over the long hall. Buy/hold and rent, it helps to have rent checks comming in during the hard times. It is still hard work and somtimes not worth it. But it is somthing that I have and would recomend real estate.

  24. Judi says:

    When we bought our modest house in 1983 our son was about to start kindergarten. When he left for college in 1996 the house was paid off so we switched our mortgage payment into a monthly college payment. Put all three children through college without loans that way. One key element: buy the house in a great public school district.

  25. Tim says:

    sometimes experience does know better. Be self-sufficient regardless of whether you choose or not to be dependent upon someone else. Money and patience comes hand in hand: there are no quick things in life, and if you see or hear someone getting rich quickly, you are among the nearly 200million plus individuals who did not and probably will not. you can have fun, but konw that there are costs associated with it, whether it be delayed retirement, future ability to buy or do something else, etc.


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