10 Financial Commandments for your 20′s – Part 2
On Monday, I posted Part 1 (goals 1-5) of how I’m doing with Kiplinger’s 10 Financial Commandments for your 20′s.
Here is Part 2 of my review:
6. Establish credit. In order to qualify for the best interest rates on a credit card, auto loan or mortgage, you need to start building a solid credit history. In fact, a good history can also save you a bundle on your auto insurance or help you land an apartment or a job. Building a good credit history in your twenties will ensure it’s ready when you need to use it.
My credit is good right now. I have a solid credit score and no real blemishes. And I consider that to be some sort of miracle, since I spent the majority of my 20′s being a major financial screw-up. Now I check my credit score with both Equifax and TransUnion once a year, and because of my scores, I have been able to secure 0% financing on my LASIK eye surgery, new car, and braces – as well as a pretty decent interest rate for my mortgage.
7. Have a marketable skill. Your twenties is the time to invest in yourself to acquire those skills that will start your career and boost your earnings. It’s also a good idea to start building and maintaining a network while you’re young. Personal contacts can come in handy to further your career or even enhance your personal life.
My best skills are my ability to work hard, and to motivate myself. Even though I only have 2-year diploma (plus 2.5 years towards a degree that I never finished), and even though I’m not particularly remarkable at anything, I feel like I’ve done fairly well so far. I’ve done the best that I can to market myself, and I think I have a somewhat decent network of people established. My income has increased 250% since my first entry-level job 5 years ago, and that is strictly due to hustle, knowing what I’m worth, and not being afraid to go after what I want. I’d like to say it’s because I possess some awesome specialized skill, but I don’t. :) Now I’m hoping to keep my progress going steady into the future by figuring out how to work smarter, not harder.
8. Cut the financial umbilical cord. You have your own apartment and your own paycheck. You may even have your own spouse and children. Isn’t it time you grew up? If Mom and Dad are still preparing your taxes, balancing your checkbook or managing your investments, consider this: Whoever controls your finances controls your life.
Even though I sometimes get jealous when I see friends still getting help from their parents, I am really grateful that I never got that kind of treatment from my parents growing up. Even though I’d probably be farther ahead in life, I wouldn’t be as independent as I am today, and that will only help me in the future. My parents didn’t pay for my education (although when I lived in Michigan, they paid for my flights home). They didn’t buy me a car, pay for my groceries, fill up my gas tank, do my laundry, buy me random presents, and they also didn’t give or lend me any significant sum of money. Actually, I remember once they loaned me $1,000 so I could repair my car before driving to Northern Alberta for a job, but I paid them back within 2 weeks.
They did, however, let me live at home rent-free while I was in school. I am so grateful I was allowed to do that, otherwise I would have been in so much more debt than the $20k+ I had accumulated after graduation. And as soon as I finished school, I started paying them rent. When I started working, and my contract ran out (I was without a pay cheque for 11 weeks), I lived off of my Emergency Fund and still paid them rent. I never asked for a break, and they never offered.
I don’t come from a wealthy family, and I don’t have a lot of education, so I feel like I’ve had to earn everything that I have in life. Nothing has come easily for me, and I think that has really shaped me into the person I am. I fully believe it was my parents that instilled the work ethic that I have today.
9. Marry wisely. You and your spouse create the most important team in your life. You’ll want to make sure your team works well — and shares similar financial values — so you can work together toward common goals.
Well, I am clearly not married. But even though I haven’t “achieved” this goal yet, I think that my past relationships have given me a really good perspective of what I am looking for in a partner. Sometimes I have a hard time connecting the logical thinking that goes in my head, with what I feel in my heart. And I think when it comes to “love” and what I really want, I need to trust my heart more than my head. Which seems completely backwards for me. But I understand who I am now, and I’d be content with being alone for the rest of my life, than be with someone who isn’t exactly what I’m looking for.
10. Have some fun. Personal finance doesn’t have to be boring. Taking the time to travel and have new experiences before you have a couple of cranky kids in tow is not only easier, it’s cheaper. Build some memories, meet new people and try new things. But please, don’t go into debt to do it.
I think it’s obvious that I’ve had my fair share of fun while in my 20′s. The first half of my 20′s, I had fun on borrowed money, and ended up with a huge pile of debt. And then during the last 5 years, I’ve had more fun than I’ve ever had, and it’s all because when you save and pay for everything up front, there’s no stress or guilt involved with spending. :)
Each year keeps getting better than the next. 2011 has been such a wonderful, sad, weird, refreshing, strange year. I’m excited to see what kind of fun 2012 has in store for me.
How are you doing with goals 6-10 of the 10 Financial Commandments?
13 Responses to “10 Financial Commandments for your 20′s – Part 2”
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I just want to note that even if you “only” have a 2 year diploma, it is clear to me that you have some serious skills! Your writing style is engaging and you know how to self-promote. You don’t learn that in school. And like you said, you work really hard too!
I think I’m doing good on these, which is good since I don’t have all that much of my 20′s left!
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I almost feel like cutting the parental umbilical cord and marrying wisely should be #1 and #2. I know parents (including my own) think they are helping out us kids when we run into financial problems.
But just giving us money isn’t solving anything, which is why I’m basically the only one out of 5 kids that doesn’t take “help” from my parents.
It’s more of a crutch and I want to fail or make it on my own merit. I am still grateful for any advice or council though, which is priceless.
Finding a partner in life that you can share similar goals and work together well with is a huge thing in my book. Financial arguments and infidelity are the top areas that cause divorces. So marrying wisely is super important.
These are excellent points.
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I think it’s interesting that more and more personal finance advice is revolving around the idea of being careful in choosing the person you marry. I think that this is a great issue to point out.
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I totally agree, and I hope to expand on that thought in a later blog post. With so many people citing money as the reason for break-ups or failed marriages, it’s no wonder people are warning others to be more cautious. Especially because splitting up with someone is so costly – both emotionally and financially.
@Krystal Yee: I had a lecturer once who referred to STDs as “sexually transmitted debt”.
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No one ever mentions the stress and financial issues that can come from marrying the wrong person. If that person isn’t on the same track as you when it comes to saving, progressing, and planning for a good future (including retirement), you might as well be single.
I have a question, how do you check your credit score? Is there a way to do it for free? Last time I requested a free report it did not have my credit score on it!
No, you can get your credit reports for free, but you have to purchase your credit score through either Equifax or Transunion.
Ah, so you pay every time to see your credit score? ($20~ i believe).
What is the point of checking it often?
Will my credit score decrease if I check it?
Because your credit score is an indication of your financial well-being, it is super important that you monitor it on an annual basis. Even if you’re debt-free, make all of your payments in time, and don’t see yourself buying a home or anything that would require a credit check in the near future – you should still be checking for inaccuracies. Which are a lot more common than you think. And if you find an error in your report, it can take a long time to jump through the hoops to get it corrected.
And no, your credit score will not decrease if you check it. That is called a soft pull. The only time your credit score will decrease is if there is a hard pull on your report – which is generally whenever you apply for a credit product.
Why are you going to pursue good credit score? Wouldn’t it be better to avoid it all?
Perhaps, I am an enternal romantic, but i am strong believer that being in love comes first in marriage.
Not the financial goals. If you will be happy, it comes together… :-)
Oh, I definitely agree that love comes first in a marriage – but at the same time, if you don’t have the same goals in mind and if you aren’t working towards the same sort of future together, then how will it ever work? There needs to be that right balance.