7 Money Tips for Recent Graduates and People in their Early 20’s

by TTMK on April 28, 2014 · 9 comments

money tips for recent graduatesWhen we are younger, it seems like we have our whole life ahead of us. Anything can happen of course, but for the typical person, there would probably be another 60 years to go. That’s a long time, and a lot can happen!

Life is full of milestones, and great activities. We are blessed to have things such as:

  • Work, maybe lots of it for many years
  • A career we really like (or not, but hopefully!)
  • Our own business, perhaps for some of us
  • Marriage (for many of us)
  • Kids (again, for many of us)
  • Graduations
  • Vacations
  • Aging parents (bummer)
  • Unexpected difficulties (yes, that’s life like it or not)
  • Exciting hobbies
  • Fun with family and friends

So, what can somebody just starting out do to put himself or herself in position to enjoy all of this? Well, there are probably so many answers that address that question. From the perspective of a person who is past his 20’s and has 2 young kids of his own, I’ll try to give my thoughts on the financial aspect of this question.

Below are 7 money tips for new college graduates and people in their 20’s.

Find your passion and pursue it, but don’t ignore money

Okay, it’s an age-old debate on doing what you love versus doing what will make you money. We each value money and material things differently, so it’s not my place to preach – so I’ll try not to do too much of it:)

What I’ll offer up here is that if you pursue money and don’t truly like what you do, there is a good chance you will feel unfulfilled. Now, taking care of basic life needs is more important than self-actualization, but at some point being a mercenary for money might get old. Moreover, it seems to me that people who truly love what they do and have a passion for it can be extraordinarily successful in ways that they might not have foreseen early on.

At least keep it balanced is what I’d suggest. Money is important, but so is liking what you do for much of the day.

Get your career started as soon as possible

I know that a lot of people might talk about taking time off, exploring, etc. There is a lot of merit to that, and I totally agree that when younger we should be exploring our likes/dislikes when we have the time to do so. Plus, stakes are a bit lower when younger.

That being said, there is an advantage to figuring things out early in terms of your passions and direction. I’d suggest having a career plan and moving forward with it when young. The stronger your foundation with your career, the easier it will become to advance and get increasing responsibility and income.

Be flexible and adaptable

In days past, it seemed like things changed at a much slower rate than they do now. It’s logical that this trend will continue, and the rate of change will accelerate even more. By change I mean technology, how we communicate, how we work, which skills are in demand in the marketplace, and business in general.

So while we need to build that career foundation as noted above, we also need to be flexible and adapt to changing circumstances.

Start saving money right away

The power of compounding is enormous. I am eternally thankful that I was able to save a little bit of money when younger, as it has grown into quite a bit more. Still, I could have saved more.

Of course there is a balance between living for today and planning for the future, and it helps to keep that in mind. The reality is that we can have a lot of fun without breaking the bank and risking the future.

If you splurge, do so for experiences rather than material things.

Buying a really nice car with a substantial monthly payment is silly when starting out. Or, for that matter, for other times in life unless truly financially successful with needs taken care of. Ditto for buying a super nice condo or home that costs a lot but is in some “trendy” area of town. Yeah, I did that and got lucky that I made a little bit of money on it, admittedly. But still, it wasn’t totally necessary and could have turned out differently.

I’ll tell you what I don’t regret splurging on: traveling and other life experiences. For example, in my 20’s I took a 3-week trip to Europe that I probably had no business taking from a practicality standpoint, but really I had the time of my life. Those types of life experiences are priceless and I still look back on them fondly.   Much more so than any nice shoes, gadgets, or material things like that.

Experiences over material things

Don’t waste time on a dead-end relationship

Since this blog often addresses topics of money and relationships, I’d be remiss if I didn’t bring up relationships in some form!

I’ve seen a few people make some decisions when younger that involved relationships that were going nowhere, but they followed them to no avail. This involved things such as giving up a dream job to pursue a relationship instead….only to be dropped a week after that (NOT me, I might add – but some guy I knew!). Plus a few other crazy things I’ve seen happen.

It seems to me that the best thing to do is focus on getting your life settled and in the direction you want to go, and then get serious. Again, the sooner you figure things out, the better!

Avoid Debt like the Plague

This has been written about ad nauseam, but it’s worth briefly revisiting. I say that because it seems like starting out in debt seems all too normal. Not just student loan debt, but car loans, credit card debt, and so on.

Get rid of those student loans as soon as possible, and avoid consumer debt. If a bill can’t be paid off in full when it arrives, then too much is being spent. It doesn’t matter what others do. Avoiding debt allows one to get ahead and start building savings. Which, over time, can take care of needs and allow us to have more freedom!

My Questions for You

What do you think of these suggestions. Do you have any others to add?

Did you approach money (and life) this way when graduating and starting out?

If you’re in that position now, how are you approaching money?

{ 9 comments… read them below or add one }

Kathy April 28, 2014 at 10:19 am

I absolutely agree with saving some money when young since it compounds so nicely. My first advice to our son when he started working after college is to sign up for any and all retirement plans than he qualified for. Doing that before he even got his first paycheck meant he never saw that contribution, not even once, so he didn’t ever miss it. When he and his girlfriend (now wife) moved in together I advised him 1) don’t comingle bank accounts until you are married 2) don’t buy a house together until you are married and 3) don’t have a baby until you are married. He followed all the advice and now they seem very happily married with a new house….no baby yet! I give good advice!

The only thing I take exception with is the advice that dominates the personal finance community. That is to buy experiences and not things. It may be good advice but it really comes across as pretty sanctimonious. Only the individual knows what makes them happy and if travel isn’t something they particularly enjoy, then maybe something else will take its place. (Personally, I hate traveling because I am terrified of flying). And who decides what is a thing versus an experience? Perhaps season tickets to the local football or college basketball team gives someone great times. Are those tickets things? Or is going to the game an experience? It is easy to get judgmental. Believe me, I know, because unfortunately, I am.


jim April 28, 2014 at 10:52 pm

You gave your kid great advice – same advice I’ve given mine – ha! Great minds….


TTMK April 29, 2014 at 12:07 am

All great advice, you did well! You know, you make a good point about the experiences/things suggestion. We are each different, I agree. My own preference is experiences with people, but perhaps others get more long-term enjoyment out of material things.


Peter H. April 30, 2014 at 8:38 am

Great advice Kathy…. I’m planning to give exactly those advices to my kids and I pray that they follow. I would maybe go one step further and say, don’t even move in with your girlfriend before you guys are married.


Kathy April 30, 2014 at 9:41 am

Peter, I would have preferred he didn’t also. But since he was 30, and completely financially independent, I didn’t feel I could say much about it. Thankfully, it resulted in marriage.


Debt Busting Chick April 28, 2014 at 2:40 pm

I enjoyed this post. I’m late 20’s and I wish I had started saving earlier and jumped on the career ladder earlier too. I wasted time in a dead end relationship and managed to get in a load of debt. I could be a good case study for you because I hardly did any of the above.


TTMK April 29, 2014 at 12:12 am

Glad you liked the post. The great thing is that in one’s late 20’s, it’s a great time to learn from these experiences (without dwelling on them) and live the life you want going forward!


Kay @ Green Money Stream May 4, 2014 at 8:23 am

These are great suggestions. I agree with all of them. For me, the most important ones are to not spend time in a dead end relationship and especially, to splurge a little on experiences. One thing I definitely regret is not taking the time to travel in my 20’s when it would have been easier with family and career constraints.


Poor Student May 4, 2014 at 2:42 pm

This post is really relevant to me right now. I agree with start saving early. I’ve been thinking about how to start early with retirement fund and have been gaining as much information as I could to make informed decision. I also agree with ‘buying experience, not things’. For myself it’s something that I always keep in mind!


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