5 Personal Finance Tips for Young Adults & Recent Grads

The following article is an in-depth guide on personal finance tips for young adults, recent grads, and really anyone in their 20s.

I’ve been wanting to do this post for a while now, as personal finance and investing have become a passion of mine within these past few years. And it frustrates me how much bad advice floats around regarding money management.

Here is something to keep in mind – 69% of Americans don’t have $1,000 in cash saved up. According to a 2019 GoBankingRates survey.

Everyone’s background is obviously different, but that statistic should scare you about the validity of what you’ve been taught all along in regards to money (It scares the hell out of me).

“Well why should I listen to you? Aren’t you just a marketer and not a finance guru?”

While I am definitely not an expert in this subject, I would argue I know more than most.

My portfolio returns, inner circle of intelligent finance professionals, investing books I’ve read, and the ability to plan out the long term game serves as some credibility (or at least I think lol).

A huge thanks go out to my good friend Alex Smith, who has greatly enhanced my investing knowledge (I still hit him up with questions).

He manages one of the best personal finance blogs on the Internet called Wealthy Diligence. Give it a read!

I was also featured in an article on Little Miss Finance, which covers similar personal finance advice as seen in this post. (Thanks Malia!)

The personal finance tips I’ve included below essentially apply to anyone, but they are aimed at young adults.

Disclaimer: I am not a certified financial advisor, and make no claim or guarantee for specific investment rates of return. I am just some guy on the Internet providing content that is for informational and entertainment purposes only.

Personal Finance Tips

1. Avoid & Remove Debt ASAP

It still blows me away that the average American is $38,000 in consumer debt (excluding mortgages) – according to 2018 CNBC study.

While there are some forms of “good debt” (real estate, business loans, etc.), I like to refer to personal debt as the devil and try to avoid it at all costs.

So what exactly is “good vs bad debt?” Well, put it this way – If borrowing money increases your net worth over time or has future value then it’s considered good debt. If it doesn’t it’s bad debt.

Although he gets criticized for his perspective on this, Dave Ramsey HATES debt. He consistently quotes this famous Proverbs verse – “a borrower is slave to the lender.”

I don’t necessarily agree with Dave’s holistic view on credit, but he makes great points on how becoming debt-free is a game-changer psychologically.

Ultimately, carrying debt for most of your life will hold you back from achieving financial prosperity.

2. Always think LONG TERM

Choosing short term gratification over long term gains is a trap that many fall into. I’ve done it, you’ve done it, everyone is guilty of this.

No, I’m not saying don’t ever have fun. But our generation is way too caught up in “flexing” on social media for short term pleasure.

The whole “keeping up with the Joneses” concept is still extremely prevelant in our society today.

Gary Vaynerchuk says it best here:

Stop buying dumb shit to make people you don’t even like think you’re doing well …

— Gary Vaynerchuk (@garyvee) March 28, 2019

The purpose of me writing this is to get you to think about turning unnecessary purchases into long term rewards.

Instead of buying that new car, the latest iPhone, and other materialistic purchases, think about investing that money for your future.

Investing $1,000 in a proven index fund or ETF goes a long way instead of upgrading to the latest phone to impress others.

3. Consume Content from Credible Sources

When trying to learn anything it’s crucial to listen to individuals that demonstrate credibility and trust. This is huge in personal finance.

The personal finance and investing information I consume is through a select few.

I should note that there was a particular book I read that really sparked my passion for personal finance, which is Financial Freedom by Grant Sabatier.

Grant shares his story of going from $2.26 at age 25 to having $1.25 Million at age 30, and how he achieved financial freedom. I HIGHLY recommend this book, it’s a game-changer.

For more information on the book and Grant’s story, check out the link below.

Financial Freedom by Grant Sabatier

Listed below are the other resources I consistently use and recommend to others for all things personal finance & investing:

• Dave Ramsey – YouTube Channel
• Chris Hogan – YouTube Channel
• Graham Stephan – YouTube Channel
• Alex Smith – Wealthy Diligence Site
• Andrei Jikh – YouTube Channel
• Malia Gudenkauf – Little Miss Finance Site

4. Investing > Saving

No the U.S. stock market is not evil like the media and politicians sometimes portray.

In fact, the U.S. stock market enables average people to elevate to “everyday millionaire” status overtime.

“But it’s complicated, I’ll pay someone else to do that, why would I invest money when I can just save it in my bank? Where do I start investing?” These are common remarks for those new to investing or those who dismiss it.

Luckily for us investing these days is easier than ever. The easiest method to get started from my experience is to open a Robinhood account.

You can use the link below to get started, and you’ll get a free stock just for signing up. You’ll thank me later!

Robinhood Account Registration with Free Stock

Below you will realize why you should be stashing money in a high-interest savings account instead of your local bank.

You will also find screenshots of my current investment portfolio (Vanguard, Robinhood, and Roth IRA).

High-Interest Savings Accounts

In technical terms, your savings account at the local bank is just a depreciating asset due to inflation with its 0.10% interest rate.

That’s why you should have an emergency fund within a high-interest savings account such as Ally Bank, Wealthfront, SoFi, Betterment, Robinhood, etc.

As of this writing, A solid high-interest savings account has interest rates between 1-2% (these constantly change based on the Federal Reserve).

I personally use Wealthfront for my emergency fund and when I started last year I was getting an interest rate of 2.57%!

Wealthfront account

My Investment Portfolio

I often get asked, “what stocks are you investing in?” So below I’ve included my screenshots showing my Vanguard, Robinhood. and Roth IRA portfolios for those wondering.

In no way are these the “correct/right investments.” But the majority of my funds lie within VTI and VOO, which are Vanguard ETFs that track the index of the S&P500.

Exchange-traded funds (ETFs) are investment funds that hold assets like stocks and bonds that track an underlying index (like the S&P500). Because of diversification and historic returns, I HIGHLY prefer ETFs over single stocks.

And from 1957 – 2018, the S&P500 has an average annual return rate of 7-8%. (Investopedia) You can’t beat an annual return rate of 7-8%!

Therefore, buying & holding diversified funds that track a proven index like the S&P500 is the name of the game.

Important Note: Prior to investing you should be debt-free (excluding your mortgage) and have an emergency fund of at least 3-6 months of expenses.

Vanguard Portfolio

Robinhood Portfolio

Roth IRA portfolio

5. Focus on Net Worth NOT Salary

There’s a huge misconception floating around in our society that “it’s all about what you make a year.”

This couldn’t be further from the truth as there are several people making over six figures annually who are drowning in debt.

The reality is it’s all about your NET WORTH and not your salary. A high income doesn’t mean anything if it isn’t saved/invested.

Net worth is simply your assets minus your liabilities.

• Assets = cash, investments, real estate, etc.
• Liabilities = debt (student loans, mortgages, credit card balances, car loans, etc.)

I track my net worth through a spreadsheet on a monthly basis, which helps me stay on track towards the end goal of financial freedom.

I highly suggest starting to keep track of your net worth, while also prioritizing net worth over salary.

Final Take

Overall, as I’ve gotten older I’ve realized there are way too many misconceptions floating around about personal finance that are bogus.

I hope these personal finance tips provided some value for you (if you made it all the way through this article).

If you missed my previous article on my favorite YouTube channels for career advice, you can find the link for that below. This post gained plenty of traction over the past few weeks.

My Top YouTube Channels for Career Advice in 2020

If I missed anything in this article or if you have any thoughts on personal finance please reach out!