Life milestones have evolved over the past half century. In the post-war period, people in their 20s were typically expected to find a steady job, buy a home and start a family right away. While this is still a relatively common formula in North America, economic conditions and cultural ideals have transformed into a new paradigm for growth. Now, when and how people settle down has changed, accompanied with a few additional steps before starting a family. In this article, we will examine a few important things a person coming of age in this decade will have to deal with, the virtues of these pursuits and ways to thrive financially before settling into a clear life trajectory.
SEE: 8 Financial Tips For Young Adults
Get Some Accomplishments Under Your Belt
The merits of pursuing post-secondary education have been increasingly scrutinized in recent years, with student loan debt reaching the billions and new graduate unemployment levels jumping into the double-digits, the concept of an education being a ticket to success is arguably becoming a relic of the past. However, while the value of studying certain disciplines is debatable, any form of professional development demonstrates motivation and an ability to learn, which can be a boon to your financial future.
Today's job market can change dramatically, and by the early stages of adulthood you should be flexible enough to adapt accordingly. Are you in your 20s and in the middle of an undergraduate degree in sociology, but suddenly you want to become a pipefitter? Don't hesitate to do it. While you may find yourself in academia longer and potentially incurring more debt, it's easier to make these switches earlier in your life than later, especially if you find yourself committed to a job (rather than a career) and supporting dependents. Want to blog for a website or develop your writing skills? Again, it's easier to dedicate time and energy to these pursuits when your responsibilities are relatively minor. Focusing on personal goals pertinent to your marketability should be a priority in your early 20s.
Take Advantage of Your Mobility
If you find yourself within the age range of 20 and 29, you may also find yourself accompanied with people staving off marriage well into their 30s. With that lack of obligation to a spouse or parenthood, traveling abroad is a tempting endeavor to many, and in recent years, has been culturally accepted as a financial milestone for young people next to buying a new car and a home. While building your personal wealth is a significant endeavor everyone should pursue, there is intrinsic value in doing certain things like exploring opportunities beyond your borders.
However, it's not cheap. If you are impatient and optimistic about your ability to service the debt later, you could take out a line of credit; you could also spend a few years working before you embark on your grand adventure. However, if both methods of funding your trip, and the sheer waiting for your goals coming to fruition seem unpalatable, you can go for the middle ground and get a working holiday visa, which will permit you to undertake employment in the country you are traveling in. You won't exactly be hired for executive positions, but you will be earning money to help cover your travel expenses. For instance, Australia and Ireland offer working holiday visas to a wide range of nationalities, including Americans. So if you don't wish to spend a few years of your twenties scrimping and saving to go see the world, finding temporary work abroad may satiate your wanderlust, and you may even find yourself wanting to make your travel destination a permanent residence.
SEE: 5 Of The Best Work Abroad Programs For Young People
Pay Down Debt and Make Your Money Work
Borrowing today takes away your ability to consume in the future. Though utilizing loans is advantageous in building your credit history, it is important to remember that incurring debt robs you of future opportunities; thus, calculate the ROI of endeavors that require you to borrow. Are they going to be a burden to you in the future or build your personal equity later (such as purchasing a home or adding more marketable qualifications under your belt?)
Moreover, it's good to exploit the wizardry of compound interest early by investing in your early income-producing years. It can mean a difference of thousands of dollars in your retirement years than if you invested later. Do you have an employer with a matching 401(k) plan? Capitalize on it. Find yourself with some extra cash after bills and other monthly expenses are paid? Immediately toss that into a savings vehicle like an IRA or a money market fund. Avoid falling into a somewhat nihilistic mindset of satisfying current wants in the hopes that the later version of you will foot the bill, especially if that version plans to comfortably raise a family and retire.
The Bottom Line
Although previous generations have built a basic framework for its young adults to conform to in order to be considered successful, changing societal norms and the current economic environment has left a few individuals lost and embittered by the expectation to fill in all the checkboxes outlined by society's model. What worked for them may not be achievable or fulfilling for the new batch of adults joining the workforce. However, a few of the basic steps mentioned above can provide some adaptable guidelines for "Generation Yers" to navigate the new economy, enjoy their lives and prosper financially.
SEE: The Biggest Financial Hurdles Young People Face