If you’ve done much financial reading, you’ve probably encountered a lifetime guide to your money. It’s a popular feature of many money magazines, writing about the career goals and types of investments you should have at various stages of your life, and showing how they change as you get older. It’s very helpful information to have, and arranging the information in time-line form makes it pretty easy to follow.
There’s just one problem: the youngest age usually given is typically in the thirties (sometimes even in the forties). While that might be understandable, given their prime demographics, it still leaves younger people in a lurch. How can you start handling money and career if most sources of advice assume that only your parents or people their age actually care about their finances?
Well, we’re going to rectify that a bit today. What follows is a stage by stage guide to help manage your personal finances and your career, focusing on the time frame from when you can first get a job to when most of those other guides take up the slack (in your thirties or so). These are not the only things you need to do financially and professionally in your teens and twenties, but doing them will definitely put you on the right track to solid personal finance. For each of the following age brackets you should:
In Your Teen Years (14-17)
-Expand your financial education: It’s an oft decried defect in the educational system (well, one of many), but young people in the US don’t get much exposure to money management concepts in school. You’re going to have to study outside of school to learn about personal finance. You don’t have to become Warren Buffett before you start investing, but you should know why he comes up so often in discussions of investing (among other financial topics).
-Keep Up Your Grades: I know it’s hard to see how doing well in chemistry or physics will help you if you want to go into journalism, or the importance of English Lit if you want to be a chemist. But doing well in your classes (ALL of your classes) can open lots of doors if you’re planning to go to college, letting you get into better schools or increasing your chances of financial aid once you’re in. Even if you don’t go on to higher education, potential employers are more likely to be impressed with a school record that’s got lots of As and Bs on it than one filled with Cs and Ds. Don’t listen to people who say grades don’t matter. They just want to keep you down because they didn’t do well themselves.
-Start to Save: I realize that when you’re working twenty hours a week on top of going to school full time and have only a small paycheck to show for it, the last thing you want to do is NOT spend that money enjoying yourself. But, saving now has advantages: you’ll get into a habit that will serve you well throughout your life and you’ll be prepared for any unexpected expenses you face. Plus, if you put some of the money you’re saving into a high returning investment like a stock mutual fund, it can end up as a pretty sizable amount of money by the time you’re ready to retire (even if you want to retire a decade, or two, or three, before the rest of your classmates).
In Your Late Teens and Early Twenties (18-23)
-Get the Education You Need For the Job You Want: Whether you go onto college to get a degree or a technical school to get a certification, knowing what you want to do and how to get the needed training is a vital first step to doing what you enjoy in life. Doing some research to find a job that sounds like something you’d love to do, and figuring out what degree or other training you need to get it, will help you figure out what you should do with your life. If you’ve done well in your studies to this point, you shouldn’t have a problem getting in; the bigger issue might be paying for your education, which brings us to…
-Keep Your Debt to a Minimum: If you’ve done much personal finance reading, you’ve probably gotten several different views on what is ‘good’ debt and what is ‘bad’ debt. The argument gets rather heated at times, but the short version is that you should keep your debts to the lowest level required to meet your needs (not wants, but needs, like education and housing). Also, do your best to pay off your debts as quickly as possible so as to maximize your personal wealth.
-Start Networking: Connecting with your colleagues is fundamental to your success in the professional world. While you are starting out in your training, you are in a good position to build a network; your educational process will enable you to meet a number of people, many of whom are likely to go off to diverse locations when they finish, taking memories of you with them. If you keep in touch, and help them with their careers whenever you can, you’ll build relationships that can help you when you need help yourself.
In Your Mid to Late Twenties (24-29)
-Consider Alternative Sources of Income: You could consider this earlier (and I certainly would, myself), but as you reach your mid to late twenties, things like a spouse, a house, and children can increase the need for money around this time of your life. There are many ways you can increase your income without getting another job (which is an option, as well), from blogging to freelancing, and considering some of them as an addition to your day job, or perhaps even a replacement, would be a good option.
-Keep on Learning: It’s tempting to think that when you’ve graduated from college or trade school that you don’t need to learn anything more. But that’s simply not the case; even if you don’t go for further formal education, you’ll still need to keep yourself abreast of the latest information in your field and any new developments. Progress doesn’t stop, and if you hope to keep up with the changes in your field, you’ll need to continue to educate yourself.
-Be Prepared to Change Jobs: Like it or not, there’s a high chance that you’ll change jobs at some point in your career. Even if you do everything properly in your position, you can find yourself out of a job due to your company’s missteps or a downturn in the broader economy. Keeping your skills sharp, your contacts fresh, and your resume up to date will prove to be a big help now, and throughout your career.
There you have it, nine tips to help you guide your finances (and your life) until you reach the point where the mainstream financial media starts to pay attention to your plight. I hope they helped you get a better idea of what to do next with your life. Good luck throughout your financial life!