I was an overly ambitious high school graduate, thinking about all the things I couldn’t wait to do going into my first year of college. I as high off my first taste of freedom, with little to no real gage on what the lifestyle I imagined for myself would cost me. I recall going through all my wants, as if wants were things I needed. I would say, “I’m going to lease a lux apartment” or “F it I’ma buy a new phone or a new car to celebrate a new beginning.” Seeing people online “getting it” looked so easy to do. Then it hit me...
I had an understanding of how to gain money and how to manage it. Eventually, this led me into the world of finance, where I have been working since my freshman year of college. Though I have experience working in finance, there are still plenty of lessons I’ve had to learn the hard way. So let’s get straight into it…
What I Wish I Knew About Money In My Early 20’s
Let’s start with that celebratory whip I wanted oh so bad. Well, sis, Compound interesthas a hell of a way of making the newest fully loaded whip look like a “You up?” text at 2 am. Sure, I could be up, but I may regret it later. Compound interest can be thought of as “interest building on interest” which adds to the principal of your loan. So whatever that price tag says on the lot, the loan you took out, or the card you plan to use, it’s never truly final until you’re ready with the coin to pay it off in its entirety. Only then, will you know the real cost.
If you're in your early 20’s and there is an absolute “must-have '' desire or loan that needs to be fulfilled, be wise in your decision. Be choosy on who you get loans with. For example, I’ve found that credit unions are perfect for building credit, tend to have better rates on loans, and can be perfect for new to credit users. See if you qualify to become a member of your local credit union for your next line of credit. I can not stress this enough, READ THE FINE PRINT. Really get to know what you are getting yourself into.
Speaking of interest, how was I going to fund mine?
Like I stated previously, I envisioned a lifestyle for myself, and not having enough money to fulfill it was not in the plan. So, I picked a credit card and started to spend on the things that peaked my interest. Well after 7 months of having my card I realized quite a few things about credit cards and the best use for them.
Just kidding.
I found myself constantly carrying a balance and paying so much in interest that my minimum payment was NOT making a dent in my balance. I was spending more than I was willing to pay just because of the card’s easy access. I was utilizing a higher percentage of my credit limit than I thought I would. This began to negatively affect my credit score. I knew I had to create a plan to better use this card and realize that this was not just loaner money, but a tool.
Credit cards are a tool just like any other. When getting a card you want to make sure you make it work for you. So here are some things to keep in mind: Why do I need this? How am I going to pay it back? What is my overall plan with this card? You’ll also want to keep these tips in mind. If you don’t carry a balance, you won’t pay interest. Keep your utilization low month to month. 30% or lower tends to be great for credit building. Most importantly, don’t spend more than you can pay monthly.
Jay Z said it best:
Money comes and goes but your biggest investment is yourself.
Read that again, I’ll wait.
Okay sis, now that it has been burned into your frontal cortex, let's get into how we can live it. One of my biggest regrets looking back at my early 20’s was not making my money work for me. I was too busy working for my money to really see the opportunities that were out there to double my money by placing it into the right avenues. Although investing doesn’t sound sexy, due to it not having an immediate return, it has a way of doubling back in the long run that ensures you always have something of value.
Here are just some ways that you can invest in yourself and watch your money grow; no pyramid scheme.
Investing in stock is a common option for investing. Now I know we may not all have Tesla stock money but thanks to the ever changing technology, there are a ton of awesome apps for investing. The best part, they are beginner-friendly. Some great apps for this are Acorn and Robinhood where you can start investing with as little as the change rounded up from your debit cards!
401ks and Roth IRA’s. Now if you're ever wondering how you can become a millionaire in your lifetime this is a great way to start. There really is no way to make 401ks or Roth IRA’s sound sexy. I’ll just leave it at this and let you do your research because whether we want to admit it or not, we are all getting older. Ask yourself this, when the time comes, would you rather be on a budget, or a millionaire?.
Entrepreneurship can be one of the hardest investments to take but can feel the most rewarding. When you find your niche or something that interests you, buy the tools and practice, practice, practice! There is nothing wrong with having a 9-5 but keep in mind the average millionaire has multiple streams of income sis. Start monetizing your hobbies and watch your pockets swell.
Now that we know better... well you know the rest
Take these tips and do better, better than I ever did sis! I’m rooting for you! Keep in mind you are NOT alone. There are online communities dedicated to financial literacy, building credit, getting rid of snowballing debt, student loans, entrepreneurship, and building wealth. These communities can be found on Facebook, Instagram, Reddit, etc. and they welcome you with open arms. Financial freedom and literacy takes trial and error but keep your eyes on the prize. The money will come, just be patient and trust the process. Can’t wait to see you on the next Forbes list!
