Financial Focus In Your 20s – Part 1
Posted by Gail | Filed under Money Management, Students
Twenty-somethings have the whole world before them: careers, relationships, families, homes, and maybe even a little adventure. But twenty-somethings also sometimes lack the perspicacity to see just how much progress they can make financially with a little planning. Tell a twenty-something to start saving for retirement and you might be rewarded with a look of horror. Retirement! Geez, I haven’t had any fun yet and you want me to start thinking about retirement? Suggest a twenty-something buy some insurance and you’ll likely be scoffed at. Offer twenty-somethings some strong advice on debt repayment and you may hear, (said in a smoky drawl) “Everybody’s got debt, man. Chill.”
The thing about twenty-somethings is that so few of them can imagine being forty-somethings. Just out of school with the smell of pub-night still enveloping them, they’re often about trying to figure out the most basic of life’s rules like getting the rent paid on time. Or they’re focused on getting some of the good stuff they’ve been doing without while in school, like how to swing the payments on that snappy new convertible.
You can spend your 20s doing yourself some real damage – buying cars you can’t afford, swapping cell phones and plans every time a new bell or whistle blows, racking up all those credit cards that keep coming through the mail slot. Or you can spend your 20s laying the financial foundation for the rest of your life. If you’re of a mind to get off to a good start, here are some things to keep in mind.
1. Learn to live on what you earn. If you look around at all the people who can’t cope with their lives, very often it is because they’ve gotten into the bad habit of spending more money than they make and bridging the gap with credit. While credit cards and lines of credit seem to be a great way to have what you want now and pay later, the costs in terms of both interest and flexibility are huge. Learning to spend only the money you have already earned may be a tough lesson to swallow when your friends are off partying, buying snazzy new clothes or taking that vacation you wish you could take too. But learning to live on what you earn is the mature thing to do. If you want to be solvent – not in debt – then you must learn to spend only the money you have, and not the money you hope to have somewhere down the road.
Living on what you earn is the most fundamental of financial tenets. Without mastering this, little else is possible. And it’s not as hard as most people think. It does mean making sure your fixed expenses – things like your rent, your transportation costs and your debt repayment aren’t too high relative to your income. Once you’ve got your fixed expenses in check, the next challenge will be to ensure your variable spending – food, entertainment, clothes and the like – don’t end up out of control.
Hey, if you want to steal from Peter to party with Paul, that’s your biz. You can forgo clothing this month and next month and the month after to drink beer and eat wings, but eventually you’re going to need a winter coat or a new suit for work. So think before you drink! Am I going to need this money for something really important? If the answer is “no”, then booze it up all you want with your buddies. If the answer is “yes”, what else are you going to have to give up later on to rebalance?
Tomorrow: Financial Focus In Your 20s – Part 2
March 15, 2010 at 6:57 am
I’ll be leaving the 20s part of my life behind in a few months. It’s been a decade thats seen a huge increase in my pay from $36,000 when I started working in my very early 20s to $71,000 at 29. Wow, come to think of it that is close to a doubling of my income. I have a good chunk of change saved for retirement. At the same time I’ve had a ton of fun. I’ve even dug myself out of debt once and I’m working on my second time. This time forever. I hope.
I’m hoping that I’m setup well enough for the coming decades and all that it will bring for me.
regards,
Jason
March 15, 2010 at 8:01 am
I’m 24 and have done some good, some bad. I started saving in RRSP’s and investing in stocks when I was 18 (I invested in GIC’s when I was younger). I got married when I was 20, and at the same time we set up life and disability insurance, and monthly automatic withdrawls for emergency fund & RRSP’s. When I was 22 we had saved enough for the downpayment on our modest condo that we fixed up ourselves. We also run two of our own businesses (one was just started this past year, one has been going for 5 years successfully).
The main thing we have a problem with is consumer debt, and this is where the fights about money come in, surprise, surprise. I’m a saver, he’s a spender. I like your comment about “think before you drink” because we’ve had far too many nights spending money on food, drinks, cab fare, more drinks, etc! Before you know it, $200 is gone forever!
Since we just had our first baby in Jan., we have resolved to aggressively pay off our credit cards and car loans this year. We will then use that additional money to get our emergency fund to where it should be and start investing in RESP’s. But of course now we want a bigger house with a yard and a home office and 3 bedrooms to accommodate our growing family… so we’ll see!
March 15, 2010 at 8:32 am
Oh, Brittany. Money, money, money, money, money, money, money, money. Forget about wanting to acquire a bigger house (and its attendant headaches – movers, new furnishings to fill it, higher taxes) and make peace with what you have. Dig yourself out of the debt hole and teach your child to keep their nose out of the water, too. That’s a far more valuable gift than a bigger house with three bedrooms and a yard.
March 15, 2010 at 8:37 am
Live within your means or spend less than you earn. It all starts there. If I had to boil down great financial advice to one thing, that would be my favourite. If you can master that in your 20s, you’re all set. It’s easier to start out with good habits than to try to break bad ones later.
March 15, 2010 at 9:03 am
I will be leaving my 20’s in soon. A few years ago, I read some advice that if you do your twenties right, you’re set for life. Althought I graduated uni with 30k in student debt, since then my wife and I have set a great foundation.
Never had consumer debt. Mortgage will be gone in a couple of years. 2 cars are paid off. +100k in financial assets, +300 net worth. Middle class salaries, but great savings rates. Even had some fun along the way!
Baby on the way now, and firmly looking toward the future.
March 15, 2010 at 9:17 am
Im learning how to get what Ive always wanted and living within my means Its hard comming from a family of 7 to having your own job and making money for your self. Ive been scaling back WAYYY back but still trying to fine tune my money habits. Slowly learning from my mistakes and looking forward for every paycheck to slew money away for savings and RRSP’s one day I want to be able to say i have a net worth.. let alone one of +100k…..
March 15, 2010 at 9:21 am
I am in my 40s and wish I had this advise when I was in my 20s or even in my late teen years. My children are almost 10 and 12 and we talk about putting money away and starting RRSPs already. They know that when they get their first job they will start putting away $25 per month in an RRSP.
Talk about money with your children and let them know that it is not a free ride and you will be doing them a huge favour.
Congrats to all the 20 somethings that are doing well.
March 15, 2010 at 9:29 am
I am 27 and when I look at what I have done in the last 7 years, I don’t think I have done too badly. Like most people, some good choices and some bad.
*I have had an RRSP account since I was 19.
*My parents loaned me the money to put me through college and university and they will be completely paid off in 12 months. (I went to local institutions, so I was able to live at home with my rent being cooking and cleaning).
*My husband and I bought our first home, got married and now have a baby on the way (all within 3 1/2 years…remembering to breathe now!) Yes, we have accumulated more debt than I would have liked from the wedding and a few poor consumer choices, but even with maternity leave pending and a bit of goal setting for this year, we have managed to increase our debt repayment plan (2 years is the goal for the LOC), and boost our savings while maintaining constant RRSP contributions.
I look at some of my friends who bought the brand new house and maxed out store credit with new furniture for te whole house and just shake my head. While they are now bouncing mortgage payments and struggling to keep up with those bills, I feel great knowing my husband and I are building a great foundation for us and our little one on the way. Ya know…the things that REALLY matter!
March 15, 2010 at 9:35 am
Ahhhh sweet 20s where I knew diddly squat about money. sigh. Where is a good time machine when a girl needs one?
My boys will be smarter money wise. We’ve already started training.
March 15, 2010 at 9:43 am
I’m 26, with a house, baby, and husband. Last year we started Getting Out of Debt – this year is the year we finish. We have already paid off over $5000 in debt so far this year, and are expecting to pay off the rest ($10 900) by the end of the year, while also doubling our emergency fund and saving up for a new car and replacement windows on our house, and paying back our First-time Home Buyer’s loan on our RRSP, and contributing to our RRSP and RDSP, and our son’s RESP. Wow!
We got into debt with my student loans, then by getting married, pregnant, and buying a house all in one year. As soon as the dust settled, we made a budget… then another budget…. and another budget… until we came up with something that worked that we were able to pay off our loans with. We also began cancelling things we don’t need, like cable, an extra cell phone, our water softener, and then started coming up with alternatives to spending money, like going to the library instead of going to Chapters, running instead of joining a gym, renting a movie instead of seeing one in theatres. Now we’re looking to have all of our debt paid off by December, and then we can go on a long-awaited trip to Disney World in December 2011, after having one full year to save for the vacation, and enough in savings to justify spending that much on a vacation. Yay!!
March 15, 2010 at 9:45 am
*Off topic*
Can someone please comment on ING?
I am thinking about opening a TFSA account with them.
I opened a TFSA account with my bank but ING interest rate is much better.
Thank you very much for your help.
March 15, 2010 at 9:50 am
I was so happy to see the blog’s title this morning. Thanks so much Gail! I’m sure this will be a great series. It sure is easier to learn these lessons now rather than the hard way later.
March 15, 2010 at 10:12 am
I actually did okay in my 20’s. It was when I hit 30 that it all went to pot!
I graduated from college at 20. I moved out on my own at 21, paid cash for a $26,000 car by 28 yrs old and had $17,000 in RRSP’s on my 30th birthday, not to mention 9 years of contribution to my company pension plan. I had an additional $10,000 in the bank and I never carried any debt and paid my credit cards in full every month. It just seemed natural to live like this.
Then I met my hubby and we moved into “fast-forward” speed – got married, bought a house and had 3 babies all back to back. Before we knew it we were $12,000 in debt. Almost finished paying that off… And finally, last year, after only putting nothing in RRSP’s over the last 13 years, we are finally making decent monthly RRSP contributions and building up an Emergency Fund as well as RESP, planned spending accounts and a new car fund.
It’s a good start to “do things right” in your 20’s, but it isn’t a garantee that you’ll continue to do things right as you get distracted by life and new committments. No excuses here, just saying I did things right in my 20’s “by accident” because I didn’t know HOW to KEEP doing things right once the pressure was on.
March 15, 2010 at 10:16 am
Wow, Unorthodox, you have +100K in assets? I’m envious…
I’m 27, and the only good thing about my financial life is that I’ll have a full emergency fund (six months’ salary) at the end of this year. Also, I have an RRSP and an RDSP, but neither of them have that much in them (yet!)
One of the things that always makes me envious is other people’s salaries. I make 30K a year gross, and wonder how anyone my age could possibly have paid for a home, a car, insurance and everything by themselves, because I know I certainly couldn’t afford it. I’m still renting, and probably will be for a very long time. I also wonder how you got your hands on a starting salary of 36K, Jason, and how you managed to double it in 7 years! Kudos for doing such a good job that you deserve to be paid that much.
I guess my life is different because I have a disability, which means I only work four days a week. Still, it would be nice to have a large enough salary that I could afford things like take-out every once in a while. But for me, rent takes up a huge chunk of my salary, and by the time I’ve finished with everything else (utilities/bills, savings, RRSP and RDSPs, insurance, charity) I don’t have very much left.
However, there is a bright side to everything. Mine is that I’m better off than a lot of people I know who have disabilities, who don’t even have a job and have to live off financial assistance from the government. Also, I don’t have any consumer debt (and never did), and I’m a 20-something who has the financial discipline not to end up like some of the 40-somethings I know who are deep in debt and just now starting to save for retirement. Thank you Gail, for helping me to be happy living within my means, and for helping me to stay financially fit.
March 15, 2010 at 10:22 am
Hi Gail!
Reading your blog is a part of my morning routine so I was so happy when I saw his topic!! It’s not often that you find a great series of financial advice for people in their 20’s. I’m a twenty-something trying my best to set myself up for the future. I look forward to reading the rest of this series!!!!
For the person who was asking about ING – I have a TFSA with ING and I love it! ING is great! And with 3% interest … I have absolutely no complaints!
March 15, 2010 at 11:44 am
Although what you say is true for many people, some are not like that. I know I wasn’t like that in my 20’s. At the age of 22, I learned to save 20% of my gross income & make annual budgets. Since that time, I’ve been learning how to spend less, learning how to be more frugal, learning how to stretch my dollar…
I enjoy reading your posts & watching your TV show! =)
March 15, 2010 at 11:53 am
I had very little income throughout my twenties and I was also living in a very expensive big city. But, I lived within my means and it meant wearing the same clothes for a few summers and the same clothes for a few winters and relying on Christmas and Birthday presents to get me through each year. My rent took up a huge amount of my income at that time. After going back to school I am taking that extra income from a new job and putting it into savings, emergency and RSP’s. I’m still not doing much shopping, still not getting highlights and manicures, etc. I didn’t have any extra income in my twenties to do much with other than to save up for short term planned spending (education) but now that I am in a new job, I can focus on big picture plans.
Going back to school is a gamble in and of itself. I feel pretty lucky to have done so and to have ended up with a good job afterwards. This is not always the case. Sometimes you can go to school and wind up with a huge load of debt, an advanced degree, and few job options in this economy.
So I’m seconding Rihannon’s question…how have people significantly raised their incomes over time? Have they stuck it out at one job and built up their skills and are rewarded for hard work? Have they hopped from job to job? Have they gone back to school to upgrade skills? I’d love to hear how people have raised their income levels.
March 15, 2010 at 11:57 am
Ah, my early 20’s, when I related everything money into bar nights. I knew how much I spent every bar night (approximately) and would look at any new purchase as “hmmm, that would be 2 bar nights”. This was also the time when I had a 1:1 ratio of what I spent in the bar to what I spent in groceries. *shakes head at stupidity*
Reality was, I really was not interested in being a grown up at that time. After I got my degree at 23, and entered the ‘real world’ I was not quite as silly with money … and every day I get a little smarter, thanks to Gail.
March 15, 2010 at 12:04 pm
Hi All,
I have only been in the working world for three years (started later after switching programs mid-way through). That said, I went from a position that paid $33,000 to $48,000 in three years. I did some job hoping (same title, different office), but when I was laid off last March (good old recession), something literally fell into my lap. I am now making $10,000 more a year than my previous place of employ simply by proving myself. I know what the salary range is and what my qualifications for it were. I also have a pension plan and RRSP contributions, so that makes m every happy!
All in all, even though I am only 27, I think I have started off well. No debt, savings, emergency fund, stocks, etc. I see what living beyond your means does to a person (friends and family), and although I don’t get to do all of the fun stuff (annual vacations, shop designer stores, mani and pedi every other week), by saving now and having a little fun, I can continue to have fun!
And as for ING…I have had an account there for years and love it! The TFSA rate right now is 3% and it couldn’t make me happier! I love knowing that I have access to all of my account there when needed (will need furniture for a house, going back to school).
Have a great Monday everyone!
March 15, 2010 at 12:05 pm
I have a friend who’s finishing med school in a few short months… who’s gone from spending $50/wk on groceries to flying to NY whenever he feels like it. It’s amazing that a) all a bank needs to hear is “I’m training to be a neurosurgeon” for them to give a student a $150,000 LOC and b) how quickly you forget that using said LOC is DEBT and not disposable income. I shudder to think of what his payments are going to be once he starts his residency, where his income is going to be in the $30-40K range…
March 15, 2010 at 12:16 pm
I messed up my early twenties. Didn’t do much of anything until I went to college at age 23. I regret the wasted time.
I love the “think before you drink”. Shortly after graduating university I was struggling to pay my students loans and keep a roof over my head. A friend earned half what I did and managed to save 25 % downpayment for a condo. When I asked her how she did it – she told me she never ordered a beverage (other than water) when we went out and she never ordered dessert. She would eat her meal and have as much fun as anyone else but would pay half as much because she’d forego the extras. All that money went to savings.
Now in her thirties she’s going through a rough time – but she’s got a paid-for roof over her head. Her foresight in her twenties has saved her from disaster.
March 15, 2010 at 12:17 pm
I’m just starting out (23, nearing the end of my teaching degree, engaged, etc) and now that I’m almost in the working force, I can hear the siren call of all the things that I’ve gone without, being a poor student. I can also definitely feel the pull of “having it all at once”-itis… marriage, home ownership, children, etc. It’s a tough thing to fight!
Thankfully my parents have been teaching me about finances from a young age (they’re both accountants), so I’m going to be graduating without student debt or a car loan (where I live a car is basically a necessity). Although I still feel a tug for all the temptations above, my fiance and I have made up a 5-year plan (thanks for the idea Gail!) and we’re going to try our best to stick to it. Until then, I’ll live vicariously through my friends when they go out every weekend or buy their first house… so when their “ca-ca hits the fan”, I’m not stuck with the consequences.
This whole financial world is so intimidating… thanks for making it make a touch more sense, Gail. I’m really looking forward to this series to make sure that my financial plan doesn’t have any gaping holes.
March 15, 2010 at 12:24 pm
Re: Salary
I have had 4 jobs in my lifetime thus far.
First, when I was 10 I worked for german butchers on the weekend, and purchased all of my own clothing from that point onwards.
Second, when I was 15 I got a job with Canadian Tire.
Third, when I was 21, I got a contract job that lasted 8 months, but I learned office skills, because I had determined at Cdn Tired that I didn’t want to stand all day for a job again.
Fourth, when I was 21 until now (40). My income when I was hired at 21 was 18,720/year, within 3 months I received an increase to 24,960/year and rceived $1/year raises for 10 years, then started getting bigger raises to my current salary of 100K/year.
I did it by a) never turning down a job, b) learning everything I could about my job, and when time permitted, other people’s job c) if I didn’t know an answer to a question when asked, I would make sure that I found out the answer, or would know the answer then next time I was asked, d) to offer my assistance whenver overtime was required or complicated jobs were in process, and lastly, by always taking on more work when I didn’t have something to do, instead of sitting around and chatting.
I started as “receptionist” and currently am “General Manager” — I personally believe that being in one place for a long time is advantageous, but only if there are opportunities for growth, even if that growth is merely knowledge that you can apply to another position with another company down the road.
If you continually keep learning and retaining knowledge, you will succeed, even if that succcess is a little later down the road.
Course, I wasn’t much of a financial whiz in my 20’s, I started in my 30’s and it does make a HUGE difference. If I could go back in time…..
March 15, 2010 at 12:36 pm
I made some good and some bad financial moves in my 20s. Good: Graduating university with a small loan ($9000), and working full time for the company I worked summers at. Bad: Buying a brandnew fancy car. Best: Bought my loft at 26. Good: Paying off said fancy new car. So all in all, I’m pretty pleased with how things turned out, especially now that I’m 35, with baby, great wife, house, great life, all that.
Still I am sometimes wistful to have a youth more like how George Best spent his life, even though Gail probably wouldn’t approve:
“I spent a lot of money on booze, birds and fast cars. The rest I just squandered.” -George Best
For those without English|Irish backgrounds, “birds” = “women”
March 15, 2010 at 1:08 pm
RE: ING — also off-topic — I was in my Scotiabank today, and they informed me that they are unable to set up any transfers to other banking institutions — I assume that I would have to set that up directly through ING then?
Re: 20’s
Sigh, in our 20’s, we had no money — many many ‘dragons’ came about shortly after our marriage at 21 years of age. Great to save while you’re young, but not everyone can. And we certainly weren’t handed the wedding gifts that everyone seems to expect nowadays… however, as a result, we learned very quickly what needs and wants were. And we really wanted a house, so after 2 years, we sucked it up, and as one relative says, we lived off peanut butter sandwiches for a couple of months to come up with the down payment.
After we got our house, there was no money for decorating. I remember spending the least amount of money I could on fabric, to create curtains; we lived with cut-up cardboard boxes in our windows in our bedroom for the longest time to darken the room, and for privacy. I also took unused spare bedroom sheets, and gathered the ends with an elastic and hung them up on the window rod fasteners to create window treatments. Then used the matching flat sheet as a table cloth…
I ‘get’ it, when my mom said that for the longest time, she just wanted enough money for a can of paint — they were house rich, had the house of their dreams, but cash poor.
An elderly neighbour of mine, said that these young people today want everything brand new and want it now, and then don’t have that same feeling of pride and accomplishment because it’s not real, not when they haven’t ‘earned’ it because they haven’t paid for it.
We’re approaching our 40’s now; and sometimes, things seemed so much easier when we had less money. We didn’t have to think about what to do with it; we had limited choices. Now, it’s always a struggle and argument over what to do with what we have –not that it’s a lot, but it’s more than nothing.
Times were simpler back then. Money doesn’t buy happiness. But my point to those in their 20’s who are struggling is, ignore what everyone else has, and follow your own true desires, and work with what you have. Not everyone can have everything all at once, and that may include the savings plan and RRSP’s. (Sorry Gail, but I do think that’s true.)
Good luck everyone. It sounds like many of you are on the path leading to where you wish to be.
March 15, 2010 at 1:14 pm
@CR: ING is a great institution. You just send them a small cheque which they use as your first deposit and everything else can be done online from there. When I did have to call them over a forgotten password they were very helpful and took care of the reason why I was trying to log into my account in the first place.
It can take a few business days to withdraw money but since it’s a savings account I believe that is a good thing. I highly recommend them.
March 15, 2010 at 1:37 pm
@ Cas
Your question: RE: ING — also off-topic — I was in my Scotiabank today, and they informed me that they are unable to set up any transfers to other banking institutions — I assume that I would have to set that up directly through ING then?
That is correct, when you set up your account with ING you actually have to make the transfers on their site. You send them a cheque to initially sign up (I sent one for $10) that money is put into the account, and your Scotia account will then be added as an “account” listed on the ING profile. You cannot add the ING account to your online banking as you do with other bills etc.
I opened my TFSA account with them last year and agree that the 3% I am gettting there is worth it! It now doubles as my emergency fund and I’m happy to be earning that interest tax free!
March 15, 2010 at 1:39 pm
Oh the 20’s! It’s hard for me to believe that they are almost a decade behind now for me! I still feel like I should have all this time, but now I realize that it’s just not the case anymore. (For the record, I have been LOVING my 30s with the confidence and experience that goes with maturity).
Luckily, I have always been a goal person, even as a teen. I knew what I wanted to acheive by the end of my 20s and I made it happen. I also knew that debt was a last resort for me… thankfully my husband is the same way. So my debt load was quite small (even the mortgage and student loan was smallish). BUT as life loves to throw ca-ca even at the best laid plans, things like employment speedbumps, or maternity leave or needing a new ROOF can mess up the savings schedule….. still we put SOMETHING away every month.
That savings cushion has been like a warm blanket on a cold night financially, even if it’s not big, it’s a small measure of comfort. Neither me nor my husband is getting a pension, and we are not counting on our parents in any way shape or form. It’s not enough, we know that, but its something, and it grows a little every month. I am thankful that we started in our early 20s.
And now the 20s are behind me, I see the biggest financial hangovers that we have are the kids…. doesn’t that sound terrible? I’m hoping through some good parenting that they will pay back dividends when I am old
Too all you young folks out there…. the 20’s don’t last long!
March 15, 2010 at 1:47 pm
RE: ING they are a good institution for savings and mortgages, but you will have a hard time doing daily banking (eg chequing) with them.
For regular transfers between institutions the rule of thumb is that the institution taking the money is who sets it up (ING and PC Financial are exceptions as they do only virtual banking they are more flexible). Some banks won’t set up transfers unless it is to pay debt (loan or mortgage). I know CIBC was this way in the past (use to drive me nuts) so I switched banks.
I am 31 so just out of my 20’s and I found I was better with money during my early uni years than my later 20’s. I think it had to do with the fact that most of my friends lived really cheaply as none of us had a lot of spending cash.
Once we started to get out into the real world the keeping up with the Jones started a bit and that is when I racked up consumer debt – then my mom read “A Woman of Independent Means” and started watching TDDUP and got me hooked on the Gail way. Definitely glad I only had about 5 years of bad habits to break instead of 20.
March 15, 2010 at 1:48 pm
Pol, I agree that having kids is what totally set us back BIGTIME. I wouldn’t trade them for anything though! I recently did a financial calculation to put a “dollar figure” on them (not that it matters because I would have them regardless of how much they cost!) – I came up with a “parenting tax” of $500/month per child! We are financially raising 4 children (3 are ours, 1 is hubby’s from previous marriage) so that adds up to $2400/month to be parents of 4. It is SOOO worth it though. It just means that instead of being rich in money, we are rich in family and that’s something you can’t buy, no matter how much money you stash away!!!
March 15, 2010 at 1:49 pm
Ooops, my math was not wrong above, the $500/month was meant to be $600/month. Sorry, those of you who are mathematicians must have cringed at that mis-calculation!
March 15, 2010 at 2:00 pm
Oh if I only had this advice when I was in my twenties! I credit my husband for all the help he has given me before and now that we’re married.
Rhiannon,
Don’t fret about what other’s have done…you have done a great job and you are setting yourself up for a great future compared to other’s who do earn more than you…as some people may make more but they’re spending tends to either catch up to or surpass their high salaries. Keep up the good work and be happy for all that YOU have accomplished!!
March 15, 2010 at 2:40 pm
I am in my 30s now, but I must say that I am so glad I lived within my means in my 20s. Avoiding debt and developing good financial habits really did set me, and my family, up for the best life possible. I might not have had as much ‘fun’ as some others, but I don’t regret it one bit, because I have fewer worries now.
March 15, 2010 at 2:40 pm
As a 25 year old, I’m really looking forward to reading this!
March 15, 2010 at 3:37 pm
I’m 24 and my husband is 33. Although my husband paid off his small student loan ($7000 compared to my $64000) in his 20’s, he still has nothing to show for his age (job wise – did 6 years of uni, mostly paid by his parents, and no degree). It’s very frustrating because I feel that even though I have a large student loan my 2 degrees are greatly helping me obtain meaningful and great-paying employment.
We went to go see a financial advisor last week for the first time. He was amazed that we were able to put about $3300 a month on the student loans and that’s with $900 a month of savings! But it’s definately because we’re living within our means. Once you get onto gails methods you wonder how you were able to squander so much money before! I just can’t wait until this loan is paid off and we can start saving for a down payment on a house! But it’s definately difficult seeing many of my friends buying houses because they didn’t have to spend a cent for uni (covered by parents).
@ ING: also have a TFSA. It’s really great because the interest is added monthly and so it makes you feel much richer! And it’s REALLY easy and the people on the phone are really nice
March 15, 2010 at 4:01 pm
Does my heart good to read the comments here and see how well all of you are doing. Keep it up!
As my Mom used to say ‘if wishes were horses, beggars would ride’….I wish I had been as savvy in my 20’s or at least known a Gail back then (who would have been having fun skipping double-dutch with her friends at that time).
I’m glad that I made our son promise to start an RRSP when he got his first job – which he did – and he still pays into it. Our daughter is slowly trying to do the same.
And me? I’ve learned quite a bit from Gail and all of you here and I’m still a work in progress.
Funny the topic of ING should arise today. When our son arrives tomorrow I am going to have him walk me through getting an account with them (that is where his RRSP’s are). Over the past year or so many here had lauded their institution. My big question is how to transfer $$ from Canada Trust to them? I see in a post above that it is not possible to add them to your ‘bills’? Do I have to keep sending them cheques?….how do I get $$ back two business days later? A cheque from them? As I said…I’m a work in progress. Hopefully all will become clear tomorrow.
March 15, 2010 at 4:14 pm
Catherine, I have just copied from INGdirect website, please read below information
How it works
Getting started is as simple as writing a cheque made payable to yourself from your current chequing account at a Canadian bank or financial institution. When you send it to us, it will act as your first deposit towards real tax-free savings. Plus, it links your bank account to your new ING DIRECT Tax-Free Investment Savings Account so you can transfer money between your bank and ING DIRECT whenever you want.
Interest is calculated daily and paid monthly. Rates, like the weather, are subject to change.
March 15, 2010 at 4:16 pm
And I should add that their website is very user friendly, they answer when you call them very promptly and have excellent customer service representatives. I can’t be happier as the account owner and person banking with INGdirect. All the pluses. And setting the account is really easy.
March 15, 2010 at 4:51 pm
Thank you for all comments about ING.
I will open an account there.
Cheers!!!
March 15, 2010 at 5:21 pm
Great post. I look forward to tomorrows. I’m 24 and my BF is 25, he is graduating this year to start working full-time this summer so would like to forward him some of this advice.
March 15, 2010 at 5:30 pm
Catherine; once you send them the initial cheque you will not need to send them another one (well I guess if you want to you can
) – once the account has been set up with the cheque as the deposit – the “pull” and “push” (ie; deposit and withdrawls) are done from the ING website (or via phone) – not your everyday banking account (ie; TDCT).
March 15, 2010 at 7:53 pm
Ah……..the lightbulb flickers…..I make deposits on the internet not TDCT per se. I’ll dazzle my son tomorrow with my ING savvy – he won’t know what hit him!
Thank you Rainbow and joanne!
March 15, 2010 at 8:51 pm
What a great topic! I was fortunate to be debt-free in my 20s-thanks to my parents for picking up the tuition. I did a lot of contract work yet I was still able to max out my RRSPs and save big time. Plus because I lived at home, I also gave my parents rent money. By the time I hit 30, I bought a condo (pre-construction) and put down 25%. Then I focused even more on saving to ensure that I could pay off my new furniture and start an emergency fund – which I did. Now that I’m living on my own and have a full-time job, I’ve learned to appreciate the value of a dollar more. I can’t go running back to my parents home if I have money problems and I’ve learned to live within my means.
March 16, 2010 at 3:59 am
Oh, boy ‘if wishes were fishes, no one would starve’
In my 20’s I read every finacial advice book I could get my hands on, the problem was i didn’t *apply* any of it. Partly due to the expensiveness of where I chose to live, partly because of the people I chose to hang out with, all because of the choices I made for myself every day.
Of course, I facepalm when I start thinking of all the money I wasted, but that was then, and this is now. Everyday I get smarter, mostly through the necessity of falling hard on the cold hard ground of reality. In this case I had to live it in order to be able to apply it.
March 16, 2010 at 9:41 am
@S, regarding raising income levels over time: I found in my 20s there was nothing like job-hopping to increase salary. You could stick with the first company out of university & slowly increase your wage or you could switch companies every year or two. I went from 40k right out of uni (1997), to 60k (1998) to 80k (1999) to 100k (2000). Had I stuck with my first company there is no way I would have increased that fast.
Having said that, as an employer now, it drives me nuts to train people only to have them ‘jump’ to another company in a year
.
March 16, 2010 at 9:47 am
I am on my late 20`s and I managed to go from an annual salary of $14000.00 to $45000.00 in the past 8 years. I started at a big box store as a cashier and then moved up as cashier supervisor. Then when the store adminiastrator post became vacant I jumped on it. After 5 years with that company a position similar to mine came up with a different company. As I was close to maxing out my income at my current job and the starting rate at this new job was what I was making at the time I made the move. I was in that job for a few years and I did all I could to learns as much as possible. I then made one more move about a year ago into a government office using the administrative skills I learned on my previous jobs. I now have a nice income with potential and a oppurtunity to go to school and actually get my diploma.
My advise if you want to increase your income is never turn down an oppurtunity to learn something new even if it `not part of your job“ and work hard to give your best. If you have accomplished something good you can alway bring it to your managers attention and ask for an increase. Hey collecting $800000.00 of outstanding moneys owed to a small company by vendors in 2 months is pretty significant. Just make sure you are proffessional in your approach. What`s the worst they`ll say: no but we can discuss it at your next review.
March 16, 2010 at 12:44 pm
ING: I agree, the ING TFSA is great. And ING’s main sales message is NO FEES. That is also awesome. I’ve been dealing with them for a couple of years, no problems, very helpful. You need to be able to use a computer, though.
March 17, 2010 at 9:33 am
–Offer twenty-somethings some strong advice on debt repayment and you may hear, (said in a smoky drawl) “Everybody’s got debt, man. Chill.”–
That’s hilarious. Sounds identical to one of my friends who’s currently in $20,000+ consumer debt (none from school, all consumer). My other friends and I try to talk her out of dumb purchases and give her tips on her debt, but she just doesn’t listen. She says it doesn’t matter whether you die $100,000 in the red or a $100,000 in the black because she’ll be dead and it won’t matter, and she also pulls the “everyone’s in debt” thing. I don’t think she understands that going this route, she won’t ever be able to afford that giant house she wants and she’s going to run into a lot of trouble.
I’m very glad my bf and I are pretty smart with saving… yes we enjoy life’s little luxuries a little too much (trips to Vegas and Jamaica, going to pubs on the weekend) but we always do it within a budget and make sure have our savings and RRSPs untouched.
Thanks for writing this Gail! I’m off to read parts 2 and 3
Mary (25)
March 17, 2010 at 8:08 pm
Hey,
Although I’m not in my 20’s yet (18), I’m trying to figure out the best way to save money. As weird as it is when I was younger(11-15) I saved constantly. However once I turned 16 and go my first car my savings started to drop off slowly. At the end of graduation, I spent a month in Greece. Which knocked my savings to practically nothing. I invested in a GIC at 17 @ 4% which is doing well and I plan on rolling it when the time comes. I recently invested in an RRSP builder account. However have been reading more about the TFSA accounts I am wondering if I made the right choice. Would setting up a TFSA ING account be practical? Is it better than getting another RRSP?
March 21, 2010 at 11:20 pm
These are all great stories!
I am turning 27 this year and I totally agree that life is really moving at warp speed! I’m considering buying a place, and being financial sound is so important!
I have come a long way from 21. I think I had about $1700 saved and now I have about $85,500. I learned a LOT from investing mistakes, spending habits etc. but there’s still a TON more to learn! (like this housing market!)
@Kayla I think if you make less than $36,000 a year, a TFSA is a better choice. The amount you put in grows tax free and isn’t taxed when you withdraw it. The great thing about a RRSP is the ability to get a tax deduction from the government. Since you likely make less than $36,000 a year (I hope I’m not jumping to conclusions here) because you’re 18, you wouldn’t get the bigger RRSP deductions.
Re: ING accounts I have an ING RRSP GIC and I love it too! The great thing about ING is that they give you $25 bonus if you put in $100 and are referred by someone. I think this is allowed for any ING account, be it high interest savings, or TFSA, or RRSP.
March 30, 2010 at 3:14 am
@youngandthrifty
well it shouldn’t but usually that’s the case.
Thank you so much for your reply.
18+ college student = broke
I’m definitly going to look into that
Cheers
April 15, 2010 at 9:34 pm
[...] Gail Vaz-Oxlade wrote a four-part series to help 20-somethings put down a solid foundation for financial success. The first part deal with probably the most important lesson — Learn to live on what you earn. [...]
April 16, 2010 at 7:58 am
[...] Gail Vaz-Oxlade wrote a four-part series to help 20-somethings put down a solid foundation for financial success. The first part deal with probably the most important lesson — Learn to live on what you earn. [...]
April 18, 2010 at 12:51 pm
I’m often excited to have a look at this blog in the evenings.Please keep on churning out the content. It’s very entertaining.
April 20, 2010 at 5:32 pm
Gail, I think what you are doing, with your articles, and your TV shows is awesome. You are the Wealthy Barber of Debt in the 20th century. I always thought everyone was doing better in my 20’s with all they did. The older I get (now 40) I realize they just decided to pay for it later. Besides a mortgage, we are relatively debt free.