When I moved out of my mom’s house when I was 23, my greatest fear was having to move back home – again.
In turn, I did everything I could to stretch my $1,800 a month take-home pay. By being frugal, taking on side hustles, and saving as much as possible, I was able to both squeak by and sock away a bit of cash each month. It was no easy feat, but it was doable. Remember: You don’t have to live in a van to save. Even small steps can help, like switching to a bank that doesn’t charge fees and negotiating for a lower Internet bill.
Fast forward to the present. Now that I’m in my 30s, I know that my frugality and hard-core money-saving ways paid off. Yet, there are quite a few things I wish I told my 20-something self about money.
To up your money game, here are a few pointers on how to manage your finances during your 20s versus your 30s.
In your 20s: Focus on career potential
You might not be raking in as much as you would like right out of college. But salary isn’t the only thing you should consider when evaluating job offers.
Take a look at the entire compensation package. This includes insurance benefits, employee perks, and whether your employer offers a match on a 401(k). Plus, consider this: Will there be opportunities to learn skills, work with a mentor, or move up the ladder?
I considered learning on the job as an added benefit. For instance, when I worked in the communications department for an entertainment labor union, my boss subsidized courses I took in graphic design and copyediting. That’s because those were useful skills for my current role.
And, while I was fortunate to have steady jobs that offered robust benefits, I worked in niche industries without much room for growth. Looking back, I wish I had spent more time focused on a host of job opportunities, both monetary and non-monetary.
In your 20s: Automate, automate, automate
In your 20s, it’s not surprising that you may be stressed out about your money situation. That’s why one of my favorite money-saving hacks is to automate your finances.
And yes, while you have decades before you retire, the earlier you begin to save for this goal, the better. Why is that? Two things: time in the market and the magic of compound interest. Let’s say you begin socking away $250 a month starting at the age of 25. You keep it up for 40 years until you’re 65. According to Investor.gov, if you earn an average of seven percent interest, you’ll have earned just shy of $600,000.
While I opened an IRA in my early 20s, I put in $100 and then stopped. Imagine how much I would have if I had continued putting money into it! And during one of my jobs, I failed to opt into the matching 401(k) plan until a year after I started. That’s money I left on the table.
In your 20s: Develop the discipline to cut back on spending
My friend Dave Fried, who is 39 and lives in Chicago, would tell me he treats his money as a business: You should always have more coming in than out. Fried kept this general rule of thumb in mind when he was earning minimum wage working at a screen printing shop, and when he was raking in cash selling pay-per-demand videos online.
The takeaway: It doesn’t matter how much you earn, you can always get into the habit of saving. To start, try cutting back. Try a no-spend Sunday. Or use a money management app to track your spending to see what your vices are. After having a few spend-happy months this year, I’m focusing on two major problem areas for a month: food and clothes.
When it comes to food, instead of overstocking my fridge, I’m checking my pantry before I head to the market. This helps me plan out my meals, stick to a weekly food budget, and cook in batches. As for clothes, I’ll wait 30 days before purchasing something I have my eye on.
In your 20s: Manage your debt
Sure, you wish your debt could just disappear yesterday. And while it’s tempting to conveniently forget you’re carrying a debt load, you’re going to have to pay it off eventually. Whether it’s credit card debt, student loans, or a car loan, know exactly how much you owe, and what the interest rates are.
Next, come up with a repayment plan. Figure out how much you can reasonably afford to pay off each month. It’s important to stay on top of your debt payments. Otherwise, your credit can get dinged.
In your 30s: Focus on earning potential
While your 20s is all about focusing on stepping-stones that lead to career opportunities, your 30s is prime time to make more money.
Although you can only cut so much of your living expenses, you can increase your earning potential. For example, it wasn’t until I job-hopped that I boosted my savings significantly. Another major wealth-building move for me was when I turned my side hustle of freelance writing and copyediting into a full-time gig.
In your 30s: Pay off your student loans and credit card debt
“Good debt” is loosely defined as debt for valuable assets that can grow over time. Traditional examples of good debt include a mortgage on a home or a business loan. “Bad debt” is anything that loses value over time, or has a high-interest rate, which can eat into your savings. “Bad debt” is normally thought of as credit card debt, student loans, and personal loans.
However, there are a lot of gray areas. Credit card debt can be a good thing. If you have a balance, but pay it off in full each pay cycle, this can boost your credit.
In your 30s: Continue to build your wealth
While in your 20s, you were laying the groundwork to save and invest. In your 30s, however, you’ll want to start thinking about growing your money.
There’s no single way to approach this. It depends on your personal situation, existing resources, and lifestyle preferences. For example, perhaps you want to buy your first home, or get serious about investing in the stock market. This is your time to make decisions to grow your money.
Live the life you want
And the perks of financial wellness are many — freedom from money stress, the resources and knowledge to grow your money, and the ability to live your best life.