Beautifully Frugal: What I Wish I Knew About Money Management in My 20s
In our 20s, we often believe we have endless time to figure things out and make mistakes. Looking back, I wish I had known more about financial stability and the importance of money management as a young adult. As a parent and a colleague to many young professionals, I feel a calling to educate financial wellness best practices so other young people don’t make the same mistakes. Here are a few things that I wish I would have known about financial planning in my 20s:
The Importance of Early Financial Planning
In our 20s, it’s easy to assume there is plenty of time to start saving for retirement or emergencies, and thus the natural inclination is to put saving off. However, the reality is that the earlier you start saving, the better off you’ll be in the long run. Even saving a small amount each month can add up over time thanks to the power of compound interest.
From my experience in the wealth management and retirement field, most individuals who start investing early in life express no regrets. Many who got a late start to retirement savings wish they had started sooner. Start by putting aside a certain percentage of your income each paycheck into a savings account, and increase this amount as you become more financially stable and grow in your career. Remember, something is always better than nothing!
Setting Financial Boundaries
In our 20s, it is common to feel the need to please everyone and say yes to every opportunity that comes our way. However, learning to say no can be a powerful tool in safeguarding your time, mental health, and finances. The key is to prioritize what is meaningful to you. Understand that declining invitations not in alignment with your goals doesn’t signify financial distress; instead, it demonstrates a commitment to your long-term financial objectives.
Reflecting on my own experience in my 20s, my biggest mistake was trying to keep up with what everyone else around me was doing, resulting in a serious case of FOMO (Fear Of Missing Out). This negatively impacted my family’s finances. Looking back, I realize that seeking happiness and approval led my financial strategy astray.
My advice to individuals in their 20s is to set boundaries with their spending money using set monthly budgets for entertainment, food, and recreation activities. Clearly communicate these boundaries with your friends and family, and don’t feel shame in letting others know your financial goals. Surround yourself with like-minded individuals for a healthy balance of fun and frugal.
Meal Planning for Financial Efficiency
When I was younger, I would go to the grocery store without a list, and worse, on an empty stomach – in other words, a recipe for overspending. I easily spent $150 or more on groceries with no plan, just to find myself back at the grocery store, repeating the same cycle the next week. Shopping without a meal plan means produce and meat spoiling as it goes unused in the fridge, which equals wasted dollars.
Learn from my mistake and don’t shop without a plan. Once I learned to sit down and meal plan what I was making for the week, my grocery trips became much more cost-effective. I went to the store with a plan and bought only what was on the list, saving me a lot of money and time with fewer grocery trips. Learning this skill while you are young is a game changer. A bonus: meal planning also helps you make healthier choices, effectively reducing healthcare spend later down the road as well.
Remember to shop your own fridge and pantry first to use the food you already have. Use the time spent meal planning as a self-care activity or bonding with your partner/children, coming up with recipes you know you’ll enjoy. Try to include a good mix of protein and carbs for filling, cost-effective meals.
Budgeting for Life’s Milestones
As a young person, there is often pressure to have everything sorted out. The truth is, it’s okay not to know everything or be completely settled in your 20s. You can still be a financially successful single person or single-income family. Looking back, there are many things I wish I would have done differently, but one thing I will never regret is choosing to be a stay-at-home mom (SAHM) home for my daughters. I am fortunate to have had that opportunity, and I owe it to my family’s decision to set and stick to a budget.
If you are managing a single income as a young person, be sure to create a clear budget and hold yourself accountable for following it. If you are considering marriage or starting a family, it is even more important to create a clear financial plan that includes tax considerations, retirement accounts, and college/education funds. There are many options for financial planning for beginners. Discussing these options with a financial advisor is always a good idea. There is a belief that hiring a financial advisor is only for people who are already established and making a lot of money, however, this is not the case. We work with many clients who are in college and have a limited budget to invest. It is never too early to start financial planning but there is a point when it’s too late.
Make sure you leave your 20s in a financially secure position to tackle your later-life goals by creating a budget early on, keeping these goals in mind when finding a life partner or having children, and taking advantage of resources like financial advisors to make your money work for you.
Overall, our 20s are a period of growth, learning, and building habits that shape our future selves. It's crucial to be kind to yourself and give yourself grace as you navigate this time.
Remember, making mistakes and learning from them is a fundamental step of the journey. Some of the mistakes I made in my 20s led me to exactly where I am today. I hope this month’s blog has inspired the younger generation to reflect on these experiences that set the tone for the rest of their life.
Start Your Financial Journey Today
If you want to dig deeper into your financial well-being, reach out to one of our trusted Advisors at KerberRose Wealth Management today. Our team has many beginner-friendly budgeting tips and investment strategies. Schedule a free consultation and take the first step toward securing your financial future.
