Financial Bootcamp for 20-Year-Olds: Day 1 of 5
It’s time to get your money in order.
Maybe you’re in your 20s and struggling to make ends meet, or maybe you’re just settling into a job that will finally give you financial stability. Regardless of your circumstances, however, everyone has in common a desire to make the best financial decisions.
This week we’ll help you get started.
It would be nice if there was an all-encompassing course to prepare us for this crucial aspect of our lives – something like Financial Adulting in American Capitalism. But often we have to figure it out ourselves. How do you cover your expenses with a starting salary? Should you focus on paying off student debt instead of saving for retirement? What type of health insurance do you need – and how much should it cost?
Our five-day financial boot camp will help you solve all of these big problems in easy-to-digest bites. Every day we ask you to complete a small task that will move you in the right direction. (Today’s action item appears at the end of this note.)
Your guides will be: Ron Lieber, the Your Money columnist; Tara Siegel Bernard, a financial reporter; and Mike Dang, personal finance editor. Together we have more than half a century of experience writing and thinking about these topics.
And we all survived our twenties.
Action items
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Think about the aspects of your financial life that worry you most and that give you the most hope. Write them all down and make a list of the things you want to improve or optimize. (And it’s okay if you’re overwhelmed and don’t know where to start. That’s where we come in. We’ll give you lots of ideas along the way.)
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Make sure you have a copy of your paycheck on hand, then make a list of all your active financial accounts and their usernames and passwords. These may include: checking, savings and other bank accounts; any accounts related to student debt; budgeting apps; 401(k) and individual retirement accounts; and health insurance.
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Do you have a burning question about money that you would like answered? Ask us here.
Before we dive in, let’s take a look at what our 20s were like for us.
Mike Dang, personal finance editor
When I was in my early 20s, I had just graduated from a journalism degree and was working as a researcher and fact-checker for less than $30,000 a year when the U.S. housing market collapsed and the Great Recession ensued. I had about $70,000 in student loans that I was trying to pay off while also helping my immigrant parents with some bills. Many people suddenly lost their jobs and homes – it felt like such a dark and scary time.
I didn’t know much about money, but I wanted to learn. I wanted to make smart decisions, but I also wanted to feel like I could make a few financial mistakes every now and then without feeling upset about it. I put a few trips I couldn’t afford on my credit card, saying I needed to live a little longer while I was young and unattached. This was also around the time that Suze Orman, one of the biggest names in financial media, had a television show where she told people if they could afford the things they wanted. I had nightmares where she screamed at me because I wanted something that wasn’t food or shelter.
How do you save for retirement when you’re trying to pay your monthly bills, eliminate your student loans, and help your parents all at the same time? That’s the kind of question I asked myself and finally answered when I was in my twenties and reading things like this newsletter.
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Ron Lieber, Your Money columnist
When I think about my first decade of work from 1993 to 2003, I am above all grateful.
I got lucky and got cheap rent – $260 for the second largest room in a five-bedroom house in Somerville, Massachusetts, and then about $600 for my share of an absolutely beautiful two-bedroom house in Brooklyn, at a discount because it was on a noisy street less than a block from a prison.
In 1994, I was fortunate to find an employer, Time Inc., with a 401(k) plan and matching contribution. I was lucky enough to meet a colleague there on a Saturday afternoon when we were the only ones in the office. Feeling talkative, she showed me her 401(k) statement—six figures—and urged me to start the program.
I was fortunate to meet a father who was an Army veteran and a customer of USAA, a bank that primarily serves U.S. military personnel. The bank’s magazine published the first graphic I had ever seen showing the power of compound interest. Start young and save as much as possible, they said. I did.
I was fortunate to attend college with generous financial support. I graduated with $8,000 in student loan debt and was able to afford the repayments, even on a journalist’s salary in New York.
The skills would come later, but I don’t give myself too much credit for the books I picked up, much of it on the job. That was also a great blessing, being able to work in places where experts picked up the phone and spoke to me.
“Try to be lucky” isn’t particularly useful advice, but it’s more important than many professionals acknowledge.
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Tara Siegel Bernard, reporter
Take a trip with me back to New York in the late 90s. Bill Clinton was president, Rudy Giuliani was mayor, and I got my first job out of college — as a reporting assistant — for about $32,000 a year. Dotcom stocks were all the rage.
The real estate market was on fire, or at least that’s how it felt to my 20-year-old self trying to rent an apartment in Manhattan. You had to show up at busy open houses with checkbook in hand to clear your credit report and down payment. I ended up living in a tiny, rent-stabilized studio in the West Village for $877 a month.
I remember writing down my monthly expenses on a notepad and trying to figure out how I could do it all with my take-home pay. I’ve probably saved enough to get a 401(k) match, but not much more.
There wasn’t much wiggle room anyway and larger expenses – a laptop, vacation – sometimes ended up on my credit card. It didn’t feel frivolous, but it didn’t feel good either. Those days were some of my fundamental money lessons.
I’m not sure how much I would change in my twenties, even if I could. But I wish I could have looked a little further into the future, beyond that particular moment—perhaps I would have taken even more financial risks.
The schedule for the week
Tuesday: Meet where you are: Whether you’re a student, looking for a job or working, we have some tips for you.
Wednesday: Budgeting for the haters: Budgets are a statement of values. Once you see them this way, examining your spending becomes a kind of concentration exercise.
Thursday: Managing Debt: How to Think About Paying Off Debt (Without All the Shame).
Friday: Thinking about the future: saving, retirement and finding sensible goals.
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2024-05-13 18:46:44
www.nytimes.com
