I am already in my 30s. And while I am comfortable with my current financial status, I could certainly be doing better, if I knew better (when I was younger). Also, my definition of “younger generation” here are people who’re 18 or younger and just about starting out in the real world with their first/second job — because I think they would benefit the most. But of course, this post could apply to anyone.
Suggestion 1: Live As Long as You Can With Your Family
I understand and can relate to the individualism aspect here, but if everyone can play along, it would be in your huge interest if you continue to live with your family and avoid paying rent right off the bat. Plus, paying rent is literally not going to do anything for you (maybe a $50 tax credit when filing your taxes; meh).
And think about it, when you pay rent, you’re paying for somebody else’s mortgage. An alternative solution is to share apartments with your friends. It’s still not ideal, but a good balance between the personal freedom and saving money.
Suggestion 2: Don’t Buy a Fancy First Car
If you’re just about driving around, I would highly advise you to avoid the temptation of buying a cool/fancy car — especially a new one. I’d recommend going with a certified pre-owned car, or even used that’s 3-4 years old. The only compromise I would not like you to make on is the safety and durability of your vehicle.
Getting your hands on an “acceptable” used car will depend on your definition, but it would obviously involve some extra research legwork on your end. However, the cost savings you will immediately actualize will be worth it down the line. Moreover, outside of direct money savings, here are a few other benefits:
- Because you are younger, your insurance will likely be cheaper. Combine that with an older car, and you’ll end up saving more.
- Your future repairs, oil changes, fixes will also cost less.
- God forbid, but if your car gets totaled, your losses will be a lot less when compared to a brand new car.
- Car depreciates the most, and right away (as soon as you take it out of the parking lot; heck, as soon as you sign the paperwork). If you’re buying a new car, you’re already starting with a bigger monetary damage to your equity.
The kicker here is this: If your family already has an extra car lying around, or if one of your relatives has one, go for it (assuming it’s safe and durable).
Auto loans are actually considered bad-debts. They don’t provide any real value to you outside of building up your credit score. Although, you’ll get tons of other opportunities to build up your score, and it has very little do with the amount of loan you’re paying every month — as opposed to you making consistent payments month-after-month, year-after-year.
Suggestion 3: Don’t Spend a Ton of Money on Your Wedding
If you happen to/or want to get married at 25, 26 years, or even before, I’d encourage to do so with the utmost minimum requirements. Maybe all you should do is get married in court, get the license, and call it a day.
I know this doesn’t seem like a sound advice, as marriage is also about emotion, experience, and feeling. However, just imagine this: Say you’re going to end up spending $100K on your wedding. Do you know how long will it take to pay off a $100K loan amount? It’s a lot of money!
In my opinion, you should save it for a big purchase. Spending $100k on a wedding that’ll probably last 7 days — with all the occasions & celebrations will likely set you back in life from owning your first home by at least by 5-10 years.
I am most certainly not here to tell you what you should and shouldn’t do, but only requesting to keep an open mind about how much not spending here will benefit your future. Just do the math!
Suggestion 4: Spend Less on Outside Activities
I mean sure, hang out, go watch movies, dine-in, but I sincerely believe how much you engage in these activities can be controlled. And if you feel an itch to spend the extra money that’s lying around, either transfer it to savings, or invest in stocks — a perfect segue to my next suggestion.
Suggestion 5: Invest in Stocks
Outside of your 401k, and whatnot, another super easy action item you can take is to invest in stocks. Honestly, you don’t have to be super-smart to start investing.
I have been investing for years now, and I still don’t know jack. That doesn’t bother me though, because I am following the practices that have been proven to be successful; which is, diversifying, and getting into in for the long-term.
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If you’ve made this far, it may look like I am advising you guys to not live your life. On the contrary, my intention is for you guys to enjoy the most number of years of your life expectancy.
#YOLO has nothing to do with my suggestions here, because you’re so young! You have so much left to see, live, and experience! Wouldn’t you love to retire (or at leas get to the level of being retired) 20-30 years earlier?
Say you’re going to live 90 years. And say you end up having an average life, like an average person in this day and age. Chances are, you”ll likely be needing to work up until 70, maybe 75. That leaves you only 15 years of retired life (and don’t get me wrong, it is a long time). Although, in all likelihood, you may also not be 100% healthy.
If you follow, or at least be open to the ideas listed here, it’s very probable that you can retire the same way at 55, as you would have at 75. And sure, if you still want to work, by all means, continue to do so! But at that point, you’re working more by choice, not by necessity.