In an interview with Your Money, the host of Yahoo's web series "Financially Fit" Finance expert Farnoosh Torabi shares her rules for "Becoming Rich in Your Twenties!".
1. Start saving now. "One of the things I've often heard from people in their 40s and 50s is that they regret not saving money," Torabi says. "Of course, it's a groaner to say, 'save in your 20s,' but it's even harder to save in your 30s, 40s and 50s because your responsibilities grow even more. You get stretched in even more directions, whether it's because you have dependents or bought a house. It's not going to get any easier."
2. Invest in yourself. "Whether that means getting additional education—not grad school, exactly—growing your skillset, earning more accredidations, or enhancing your knowledge of a subject and exploring new things, now is the time to be selfish," says Torabi. "You have no one else to invest that money in—you're not saving for your kids' education or paying for a wedding."
3. Find another revenue stream. "The cost of living is rising faster than wages, and if you're in your 20s, then chances are your wages are lousy. Even if you have a job and benefits, it's not enough. You've got to think outside the box to monetize your skills oustide of work," Torabi says. "You still have your natural, youthful energy so capitalize on that," adds Torabi. "Now's the time to be self-absorbed, in a positive way."
4. Don't buy a home (yet). "Buying a home is a psychological and financial journey," says Torabi, adding that if you want a mortage, there are a lot of ducks to line up beforehand. "You've got to realize there are expenses beyond the house, such as lawncare, garbage pick-up, taxes and all the maintenance. And if you don't want to be tied down, it won't fit your lifestyle."
5. Use credit cards sparingly. "Spending with these can get really out-of-hand in your 20s," Torabi says. "This is a time when you need to be making positive choices, not going on a free-for-all."
6. Avoid store rewards cards. "We're all vulnerable to going to the mall and opening not one, but three or four of these over six months just to get the discount. But that doesn't mean we should," Torabi says. The 30 percent upfront discount isn't worth the long-term debt.
7. Check bank accounts regularly. "Rather than compartmentalize it, make checking your statements a habitual, daily thing," she explains. "You can do this by checking your bank account in the morning and using the app that your bank freely offers. Knowing where you stand financially shouldn't be a once-a-month chore. That's ridiculous."
8. Be strategic about living at home. "Make a timeline for yourself if you're trying to save money or looking for a job," says Torabi, who's known more than a few grads who've mucked this one up. "By giving yourself the pressure to find a job, you'll emerge into the real world leaps and bounds ahead of peers who went straight into the real world continuing the cycle of debt they graduated with."
9. Mind whom you call 'friends'. "Peer pressure is so rampant in your 20s, but as you grow older your time gets more precious. You've got more bills, you're getting married, etc. If you hang with the wrong people, you'll spend in ways that don't correlate with your values. You need to please your own self and your budget, rather than others - so-called-friends! Your friends don't care about your money, so don't be afraid to stand up for what's important to you."
1. Start saving now. "One of the things I've often heard from people in their 40s and 50s is that they regret not saving money," Torabi says. "Of course, it's a groaner to say, 'save in your 20s,' but it's even harder to save in your 30s, 40s and 50s because your responsibilities grow even more. You get stretched in even more directions, whether it's because you have dependents or bought a house. It's not going to get any easier."
2. Invest in yourself. "Whether that means getting additional education—not grad school, exactly—growing your skillset, earning more accredidations, or enhancing your knowledge of a subject and exploring new things, now is the time to be selfish," says Torabi. "You have no one else to invest that money in—you're not saving for your kids' education or paying for a wedding."
3. Find another revenue stream. "The cost of living is rising faster than wages, and if you're in your 20s, then chances are your wages are lousy. Even if you have a job and benefits, it's not enough. You've got to think outside the box to monetize your skills oustide of work," Torabi says. "You still have your natural, youthful energy so capitalize on that," adds Torabi. "Now's the time to be self-absorbed, in a positive way."
4. Don't buy a home (yet). "Buying a home is a psychological and financial journey," says Torabi, adding that if you want a mortage, there are a lot of ducks to line up beforehand. "You've got to realize there are expenses beyond the house, such as lawncare, garbage pick-up, taxes and all the maintenance. And if you don't want to be tied down, it won't fit your lifestyle."
5. Use credit cards sparingly. "Spending with these can get really out-of-hand in your 20s," Torabi says. "This is a time when you need to be making positive choices, not going on a free-for-all."
6. Avoid store rewards cards. "We're all vulnerable to going to the mall and opening not one, but three or four of these over six months just to get the discount. But that doesn't mean we should," Torabi says. The 30 percent upfront discount isn't worth the long-term debt.
7. Check bank accounts regularly. "Rather than compartmentalize it, make checking your statements a habitual, daily thing," she explains. "You can do this by checking your bank account in the morning and using the app that your bank freely offers. Knowing where you stand financially shouldn't be a once-a-month chore. That's ridiculous."
8. Be strategic about living at home. "Make a timeline for yourself if you're trying to save money or looking for a job," says Torabi, who's known more than a few grads who've mucked this one up. "By giving yourself the pressure to find a job, you'll emerge into the real world leaps and bounds ahead of peers who went straight into the real world continuing the cycle of debt they graduated with."
9. Mind whom you call 'friends'. "Peer pressure is so rampant in your 20s, but as you grow older your time gets more precious. You've got more bills, you're getting married, etc. If you hang with the wrong people, you'll spend in ways that don't correlate with your values. You need to please your own self and your budget, rather than others - so-called-friends! Your friends don't care about your money, so don't be afraid to stand up for what's important to you."
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