3 Pieces of Financial Advice Everyone Under the Age of 30 should Live By


The 20s are usually when people start making their first financial mistakes, but it doesn’t have to be that way. This should be when you start laying the financial foundation for the rest of your life. If you follow sound advice now and start putting your money to good use, you could end up being financially independent and retiring much sooner than you expect. At the very least, you won’t have to worry about living paycheck to paycheck and will always be ready for a rainy day. Let’s take a look at some financial tips every person under the age of 30 should live by.

Understand the Power of Compound Interest

Compound interest is when you deposit money and reinvest the earnings you make on interest. Since the principal always gets bigger, the money you make on interest will as well, causing a snowball effect.

For example, if you deposit $5,000 at the age of 20 in a money account with a 3% return and add $200 to it every month, your investment will be worth a whopping $99,776.66 after 25 years. This amount shoots up to $136,508.39 with a 5% return. So, we suggest you start informing yourself on money accounts right now and invest any amount that you can, even if you think it’s small.

If you want to know more about how to build wealth for your older years, look at resources such as the build your own nest egg website. You’ll find all sorts of information on which kinds of investments you should consider along with some great personal finance tips you can follow.

Use Credit Cards to Your Advantage

Young people are often advised to stay away from credit cards, but that’s questionable. Your 20s is when you should start building your credit and having no credit history can be just as bad as having a poor one. 

Now is the time to understand the secrets of credit and use them to your advantage. First of all, it’s good to have a credit card with a small limit and use it responsibly. This shows positive financial activity, which will be the foundation on which your credit will stand upon. Next, you can consider applying for an additional credit card, but only if you’re 100% sure that you’ll get accepted. 

Spending should be kept to a minimum on your second card. Having available credit but not using it will benefit your credit utilization ratio, which is one of the major determinants of your credit score. Stick to two credit cards and treat all of your accounts responsibly. Just missing one payment on your internet or telephone bill could affect your credit score, so set up automatic payments if you’re forgetful.

Also, ask your landlord if they’re reporting payments to credit bureaus, as it could help boost your score. Even getting on the electoral roll could help, so learn what can help and hurt your credit and treat it like gold.

Look at Robo Investors

In addition to having money in a safe money account, you can diversify your investments with robo advisors. A robo advisor will ask you basic questions about your age, the amount of money you want to invest, your objectives, and tolerance to risk. They will then generate a portfolio based on these criteria that will usually be made of exchange-traded funds, which are baskets of stocks that are traded on the open market. Robo advisors can also taper down risk on your investments as you get older and gradually lose your ability to earn.

These are all things people under the age of 30 should remember when managing their finances. Do the right thing now and you might never have to worry about money again.


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