Turning 30 earlier this year made me reminiscent of many things. I’ve considered the good and bad moments of my life so far, relived some joyful memories, and laughed at some of the aspirations I had when I turned 20. However, I realized that my younger self has made some decisions that would have an influence on my future life and the way I see the world forever.
Our 20s are the time where most of us finish our education and we’re taking our first steps into our careers. This is basically the moment when we start to generate our own income, start paying bills for the first time ever, think of renting an apartment or buying one, etc. For many people – myself included, our 20s were the time when we finally had enough free time off of school and our own money to spend. So, what could be the best financial decision in your 20s?
If you look at the debt-free community, everyone will tell you that you have to focus on upskilling yourself and investing as much of your income as possible. Well, that’s not what most of the people part of that community did. We all learned that the hard way. This is probably the time where people get the most into debt.
The best financial decision in your 20s would be to pay off your debt
I personally had some low interest consumer debt in my late 20s and planned to pay it off before my 30th birthday. Fortunately enough, I succeeded. However, a lot of young people end up with a lot of student debt that they have trouble paying off. The debt-free community has a lot to offer as advice on how you could pay off your debt quickly and then to start investing.
As soon as I paid off my debt, my next focus was to build an emergency fund and start investing. The best financial decision in your 20s, after you pay your debt, could be to learn financial literacy and invest part of your income. I did precisely that and I’m extremely happy with that decision.
I got a grip on my finances, understood which are my biggest spending categories, and lowered them as much as possible without removing the value items. Then I focused on building an emergency fund and investing part of my income. This was the harder part and, of course, I’m still learning. The first step for me was to find a low-fee brokerage, then learn how to analyze a company and put my first Euros in it. It was hard but rewarding.
There’s a whole new universe of opportunities that open up for you the moment you pay off your debt and you’ve secured at least a 6 months worth of an emergency fund. You could invest in your education, in the stock market, in private lending, build passive income streams, etc. But most importantly: enjoy living debt-free and clutter-free.
I’ve decided to ask 6 finance bloggers what was their best financial decision in their 20s. They all come from different backgrounds, families, education and have different ideas. Here is what they shared with me:
Jay from jaymillenial: Tracking my net worth, saving, and investing!
My best financial decisions were focusing on saving half of my income, tracking my net worth, and investing in index funds. Tracking my net worth made me aware of my expenses and income, and presented opportunities to both cut back and scale up. Saving half of my income has taught me to be happy with what I have, and I’m able to adjust for emergencies because of this plan. Aside from that, consistently throwing my savings into index funds has allowed me to build an 800k net worth by 26.
Who is Jay?
Jay is a 26 year old cybersecurity consultant living in TX. He enjoys cars, personal finance, and travel.
He shares his financial independence journey on Instagram here: https://instagram.com/jaymillennial
Everyday Finance Gal: Focus on growing your income, education and cutting off your debt
My best financial decisions have all compounded from earlier choices. Like going to a community college for the first two years of college before attending a top private university. That move alone, cut my student debt in half, to $60k. I worked throughout college and leveraged my employer’s educational stipend of $4000 a year to cover all community college costs.
Then choosing a generic Business Admin degree (emphasis in finance and marketing) impacted my finances. It led to my current high-paying corporate role that provides income for me to invest and grow my money.
Who is Everyday Finance Gal?
Being a 34-year-old single mom, she has built her passion project of Everyday Finance Gal where she does her best to make personal finance easier to understand. All of that she achieves through financial literacy infographics, money mindset posts, and examples of her side hustle & wealth journey. Feel free to follow her on her Instagram page as well.
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My Wealth Diary: Get out of debt as soon as possible!
I had over $60,000 of student loans when I graduated college. And I was on the path to pay down the minimum for the next 30 years. But by chance, I found out about the debt-free community a year into my journey and was able to pay off my loans in 2.5 years.
Being debt-free allows me to put my hard earned money towards saving/investing in my 20s and growing my nest egg for financial freedom in my 30s.
Who is My Wealth Diary?
I am a 27 year business and tech consultant documenting my journey from negative net worth to multi-millionaire. I love tracking my financial data through graphs and visuals, and I aspire to be financially independent in my 30s and build generational wealth.
Jasmine from Money and Momming: Personal finance is not a one size fits all
Developing a budget system that worked for me. There are so many different budget methods available and I failed at each one because personal finance is not a one size fits all. I had to develop a plan that allowed me to pay myself first, save an emergency fund, send extra payments to debt, and still enjoy doing things I love.
By developing a budget I gave myself a raise. Having financial awareness allowed me to see how much money I truly had to work with if I could gain some self control. The impact has been wonderful for myself and my family. My husband and I cashflowed our wedding, combined finances, and became consumer debt free. We were also able to pay off debt, cashflow a portion of our IVF cycle that was not covered by insurance, and continue to build our emergency and sinking funds.
Who is Jasmine?
Hi! My name is Jasmine and I’m a wife, mom, and engineer who loves all things personal finance! I am a Netflix and wine enthusiast, I love the beach, and I found my passion in helping other women become financially literate.
Adrian from TheAdrianHall: Financial struggle often comes from ourselves
Evaluating WHY I was struggling financially was the best thing I did in my 20s. Beyond the budget, math, or problems—I looked within myself to see what decisions put me in the position to work 50-55 hours per week and barely afford minimum payments with no relief in sight.
I scrutinised every major purchase I made, debt I took on, and promotion/raise I missed out on. I did not guilt myself for missed opportunities (hindsight = 20/20). Rather, I focused on how I could take my newfound wisdom and apply it to my present/future.
This single-handedly led to the eventual success of my debt freedom journey, building wealth, and destroying the stress of a paycheck-to-paycheck life. There’s simply no comparison on the psychological safety you feel when you aren’t struggling financially. I could not have done it if I did not first evaluate the common denominator of my financial problems = ME.
Who is Adrian?
Adrian (Instagram.com/theadrianhall | @theadrianhall) is a personal finance educator and real estate investor who paid of $60,000 of debt
For Better of for Worth: 401k matters. Really!
I’d say the best financial decision I made was getting the 401k match and aggressively investing in my 401k from the beginning. My employers since I’ve started working have invested heavily into my 401ks and those funds have really turbocharged our net worth over the years.
Not waiting to invest has really helped tremendously, adding to more time in the market.
Who is For Better or for Worth?
Me and my wife have paid off $47,000 in just 22 months using the debt snowball method. My wife completed @daveramsey ‘s Financial Peace University first and was fully on board from day 1. I read the book right after her, I didn’t take the class tho, but got on board as well.
You may follow For Better or for Worth’s debt-free journey on Instagram.
What was the best financial decision you did in YOUR 20s? Have you managed to pay off your debt or to start investing? How that impacted your spendings, budget, and your life as a whole?
Tell us your story in the comment section down below!
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