Every year a large group of young adults enter the workforce in pursuit of happiness. At this age the amount of high hopes, energy, passion, and ambition is seemingly infinite and you can feel the invincibility in the air, your bones, and your mind. There is no other feeling like it in the world at this age, so enjoy it.
Whether you chose to enter the workforce directly from high school or pursue a college degree, each person starts asking the same question:
What should I do with my finances?
Most colleges and high schools offer very little, if any, personal financial guidance. Excluding students that pursued math, business, or similar degrees, the vast majority of young people entering the workforce know very little about managing their newfound income stream. Additionally, many college graduates have the heavy burden of student loan debt.
So what’s a young person to do when entering the “Adulting” years?
There is a lot that goes into those two questions along with your financial life, so I’ll try to sum it down. Here are my Top 10 tips for every young college and high school graduate entering the workforce.
1. Save 35-50% of your income. Forget the standard advice of saving 10-20% of your income you’ll see splattered across the web. If you want to break into the big leagues with the wealthiest and hardest working self-made success stories America has to offer then aim BIG. Since you’ll be coming out of school accustomed to living on a tight budget and a minimum wage job, a good start is to keep this habit up. It will keep you from spending that extra money on frivolous items. Plus, when you are used to surviving on a certain amount of money you won’t experience “lifestyle creep”. Instead, you’ll be setting aside this money for a home down payment, your retirement, and so much more.
2. Track your money and investments in one place. Even if you have little money, start doing it. This will help you visualize your progress, which reinforces good behaviors. At minimum you need an app to track spending, investment portfolios, and net worth over time. As your net worth grows this will motivate you to do even better.
I offer a completely free, no-strings-attached financial planning app where you can track all your bank accounts, student loans, and new investment accounts. The big plus side is your personal information is NEVER sold to credit card companies, or third-party advertisers like the apps you’ll find recommended on other websites. Usually, the article writer/blogger makes money through commissions or advertising fees for referring you to that “free” app.
I pay for this financial planning app and offer it to everyone because I know how much it will change your life. Start tracking your progress with my app(here). All you need to do is create a login to get started. Then you can download the Android(here) or iPhone (here) app on your mobile device.
3. Start Investing NOW! Don’t wait to put your money to work. You may be working 40, 50, or even 60 hours a week now with a new job, but your money will go to work 24/7/365. It will out-hustle you every day of the week and I don’t care who you are. I say this as a workaholic myself. I work non-stop and my money still ends up doing better than I do because I have to sleep and take a break every once in a while too.
If you forego investing in your 20’s and start in your 30’s or 40’s you’ll not only have to set aside a lot more each month(potentially 5x more), you’ll also end up with a smaller investment portfolio at retirement, which is not cool.
4. Start your ROTH IRA or Roth 401k. Since you’ll be saving up to 50% of your income while simultaneously investing you need to do it in a way that will save you from taxes FOREVER! Max out your IRA each year and your employer retirement plan if available. You’ll thank yourself later. For more reasons why you should start a Roth IRA read one of my other articles(here).
5. Seek professional help. This is also a good time to ask yourself if you should enlist a financial professional. Maybe you want to go solo and that’s totally fine. Or maybe the broke drunk at a bar said “that financial person just wants your money” so you decide it’s best to stay away and place all your money under the mattress.
Let me ask you a question to make sense of this. Would you perform surgery on yourself with zero training as a surgeon???
Neither would I.
We all need professional help in different parts of life. Don’t risk your own well-being because of ignorance.
I’ll share a stat with you; nearly 80% of Americans live paycheck to paycheck. The other roughly 20% of Americans live financially successful lives. Guess what percentage of Americans utilize professional financial advice? You guessed it, approximately 20% of Americans. Could it just be a coincidence??? You can decide for yourself.
I work as a Registered Investment Adviser fiduciary which means I must always do what’s best for you and it’s the highest standard set by the SEC. Furthermore, I don’t take commissions on your investments since I work as fee-only. I recommend interviewing 2-3 professionals to ascertain if they are the right person to help you succeed.
6. Get a job, your dream job, and another job. Start earning money while searching for your dream job instead of waiting for it to come to you. But once that dream job comes along pounce on it. Then pursue other ways to make money known as a “side hustle”. Whether it’s through physical labor or passive income streams you need to explore other ways to make money while you are young and have tons of energy.
To share my personal story, I’m working my dream job right now, but I didn’t get it at first. I had to build up my experience at places like the Chicago Board of Trade soybean options pit, conducting tax fraud research for the New York State Dept of Tax Finance, working at a real estate fund(AHP Capital Management), and I invest in rental properties on the side. Each new opportunity is a stepping stone to your dream job.
7. Learn new skills. Even if you already have a PhD, keep learning. Whether it’s a foreign language, writing code, carpentry, or weaving there is something you can learn. Bonus points if it’s directly related to your field and career. The most successful people I know are usually experts at a few things and are highly skilled in many other areas. They also take time to sharpen the saw in every facet of their life. Growing your skill base will make you a well-rounded person and sought after by employers. Plus, these skills may even open new doors for you.
8. Network all day and night. Since you will be going to plenty of parties you’ll be meeting people everywhere. When you encounter smart, kind, and motivated people remember to keep in touch. You never know where that relationship will take you. They might end up as one of your most trusted friends, a business partner, or even your significant other. Life’s biggest opportunities, including jobs, will come through your social network. Therefore, build the best network you can.
9. Fail often and early. Don’t be afraid to make mistakes along the way. It’s where you’ll learn the most. I learned many valuable lessons from my failures on a personal and professional level. It might seem odd, but I’m grateful for every failure since it helped me become a better person. Your path toward failure will be very similar. You just don’t know it yet.
10. Focus on you. This might be last on the list, but it’s probably the most important. You’re going to be very busy with numbers 1-9 so take time to focus on yourself. Figure out how to become a better person on the inside and out. Reflect on your recent accomplishments and failures while you’re at it. A successful young person knows how to manage their time and emotions properly.
Take time away to do absolutely nothing. Whether that’s reading in a library, relaxing on the beach, or your couch. Everyone needs to recharge and taking this time to focus on you will help you do exactly that. You’ll come back much stronger and able to help more people as a result. A true win-win.
