Financial Advice for Young People

If you are starting out and want your money to work for you, a handful of habits early on will carry most of the weight. None of this is complicated. It just takes doing it before life gets crowded with obligations.

College is one of those things worth taking advantage of while you can. Even if the field you have in mind doesn't technically require a degree, having one tends to lift your earning potential well beyond what you'd make without it. Cost is the obvious worry, so a reasonable path is two years at a community college and then a transfer to a four-year school. Doing this young, before you own a home or have kids counting on you, is far simpler than circling back to it later. If your family can't chip in, loans are there for a reason.

Figure out what you're actually good at. Pay attention to the subjects that come easily and the ones that make you want to give up. A career built around your real strengths is one you can both enjoy and use to be of some use to other people.

Retirement planning belongs in your very first job, not your fortieth birthday. If there's a 401(k) on offer, sign up the moment you're eligible. No 401(k)? Open an IRA and route a slice of every paycheck into it. Starting this young makes building wealth almost effortless. Consider the math: $200 a month invested from age 25 can grow to roughly $525,000 by the time you hit 65. Earn more and you can set aside more. Rather than picking a flat dollar figure, start at 7 percent of your income and nudge it upward each year until you're banking 15 percent.

Treat money as something with weight. It won't buy you happiness, but it does buy comfort and room to breathe. A trick that helps: convert prices into hours of your life. At $20 an hour, that $500 television costs you 25 hours on the clock. Suddenly the decision feels different.

Go easy on the credit card. This is where a lot of people slip. Swiping feels painless in the moment, and then the bill lands, and some folks spiral far enough to end up in bankruptcy. The plastic isn't the enemy; using it like it's free money is. Pay it off, keep it in check.

The golden rule earns its name, so live by it. Scheming and Machiavellian maneuvering don't get you ahead; they just breed distrust in the people around you. Treat others the way you'd want to be treated, and resist the urge to make anyone else look small. Skip the gossip, especially at the office. Be straight with people. And surround yourself with the ones who actually want to see you do well.

Choose a partner with care. Shared moral and ethical ground matters more than most people admit in the early rush. Give that first year to genuinely learning who the person is. Trust outlasts passion every time. Tying yourself to someone constantly critical or quick to anger can wear away your own sense of self and leave you living under a cloud of hostility. And if the short temper is yours, deal with it before it corrodes something worth keeping.

Plan for the day you didn't see coming. A job can vanish. Keep an emergency fund for exactly that, separate from your IRA or 401(k), funded by a steady cut of your paychecks into plain savings. Raiding your retirement accounts for emergencies is a mistake; the penalties and lost income are brutal. And when you switch jobs, move your balance into a rollover IRA or your new employer's plan. Money left behind with an old employer has a way of getting forgotten.

Learn how investing works, or pay someone who already does. It isn't some arcane science. Pick one or two solid, low-cost mutual funds and get past the nerves. Your HR department can often point you toward help. If you do hire an advisor or broker, vet their credentials, and nail down exactly how they get paid, whether it's hourly, by commission, as a percentage of your assets, or some mix of those.

Be grateful for what goes right. Steady relationships, family, a bit of money in the bank: work at all of it and you'll find yourself with plenty. Make room for the hobbies you love, take the vacation when you can swing it, and notice the good that's already around you. If you have children, spend the time with them while they're still small and still need you.