Typically, when you’re in your twenties and even your early thirties, financial security often means putting one foot in front of the other money-wise, stringing enough cash together to occasionally go out for dinner, have a drink (or drinks) with friends or take a once-yearly vacation — hopefully somewhere far away from the daily rat race.
If you’re one of the lucky ones, maybe you’ve got some idea about what you should be doing with your money long-term, but you’re not sure if your priorities are right. And frankly, considering how poorly the U.S. does teaching young adults how to be financially literate, there’s probably a lot to learn.
If any of that sounds like you, don’t worry, you’re in good company. Financial security isn’t something a lot of us think about on a daily basis, but it really should be, because so much of what we do with our money when we’re young is supposed to set us up for later on. But in order to get there, we gotta understand where we’re (possibly) mis-prioritizing, and what we need to do in order to get our financial priorities back on track.
So how do people screw up when it comes to their money when they’re young? A lot of ways. “A problem that people in their twenties often have is that they tend to prioritize experiences more than anything else,” explains Michelle Tascoe, a financial life coach based in Los Angeles. “They’ll pay their monthly bills, sure, but it’s their social life that’s most important to them: eating out with friends, having drinks, going to concerts, weekend getaways, that kind of thing.”
“For people in their thirties, there’s a clear shift in priorities: Individuals are getting married, looking to get settled into their career, or buying a home,” continues Tascoe. “They’ll still prioritize experiences, only bigger: A bigger vacation, a nicer car or better furniture.”
It’s nice that everyone has priorities, but Tascoe thinks they’re the wrong ones. “For my clients in their twenties, one of the first things I have them think about is reprioritizing from instant-gratification spending to goals that are more long term,” Tascoe says. “I emphasize the need to pay off their debts, like their credit cards and their student loans, because what people don’t realize is that their debt is costing them so much money. And I frame the idea that their money can, and should, be making them money, which for many in their twenties, is an entirely new concept.”
“For my clients in their thirties who are either married or in a long-term relationship, it’s all about shifting the focus from spending on themselves to creating a plan for their future together,” Tascoe explains. “Couples often come from different upbringings, so it’s important to create a common financial outlook to help them handle their finances together.”
Are there some goals that everyone should have, regardless of age? There sure are. Tascoe says that, no matter what, the most important goal a person can have before the age of 35 is to get out of debt. After that, doing things like planning to purchase an asset (like a house), or even just planning for both expected spending (like vacations, Christmas shopping and car payments) and unexpected spending (like sudden unemployment or an illness) are all smart moves.
And if all else fails? “Just try getting comfortable with the idea of keeping money in the bank that you DO NOT TOUCH.”