If you had to give a young adult one piece of financial advice, what would it be?

I am 22 years old and have developed a vast interest in personal finance and the economy. What would be the most critical piece of advice you would give to someone my age who has just entered his first career? I have lofty expectations for myself and my future, therefore, I want maximize my income and value as much as possible.

Personal Finance, Starting Out
Answers
Sort By:
Most Helpful
April 2017
100% of people found this answer helpful

This is truly a great question, especially at your age. In an attempt to answer your question, and I've been doing planning on a fee-only basis for 35+ years, the key is not living to the level of your income. Always avoid having to compare what you have versus your friends and neighbors. It's irrelevant and you can help yourself and your family directly if you begin to save early and often. As an example, see if you can set aside 15% or 20% of your income now and use this as a guideline for the future. Take advantage of any 401(k) plan, 403(b) plan, or any other form of retirement planning, including Roth IRAs, and begin saving today, not tomorrow. Obviously your level of income is critical in making these decisions. As an example, if your income is not sufficient to cover your basic needs, then saving is extremely difficult. However, it can still be done if you can be frugal enough to deal with yourself honestly and make a distinction between what you need and what you want. Never, and I repeat, never miss an opportunity to save and don't assume you'll ever have an inheritance or any form of windfall because it may never happen. If it does, all the better, but depending on one of these forms is simply dangerous. If you can get into a 401(k) or similar plan with a company match, do so as quickly as possible at least to the level of the match. If cash flow is short, make it a point to put one half of every year's raise into the 401(k) plan until you can get to the maximum over a period of years. Make savings a fixed expense, not a discretionary expense and you will never regret it. Your long-term goal should be to plan to retire (financially) at age 55 and not at the normal 65 or 66. Whether you actually retire at 55 is irrelevant, but if you can afford to do so, you can write your own ticket to the future. Again, my thanks for such a great question and I wish you much success.

April 2017
April 2017
April 2017
April 2017