Have you ever wished you could just sit down with a money expert and have a heart-to-heart about personal finance and financial advice? This expert roundup is basically that.
I talked to a bunch of experts to get the advice they wish they had as a young adult. No matter where you are in your financial journey, there's bound to be some advice here to help!
This post is an expert roundup of personal finance tips for young adults. Learn how to manage your money and avoid common pitfalls.
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Personal Finance Tips for Young Adults from the Experts
Jeff Rose From Good Financial Cents
My biggest mistake was not correctly estimating how much my benefits and taxes would affect my take home pay. I truly believed now that I had a "real job" that I would have enough money to max out my 401k AND buy 'all the things'! But after a few paychecks I barely had enough to pay rent, groceries and other essentials. It was a wake up call that having a job didn't mean I had made it yet.
- Jeff Rose, cfp, Good Financial cents
Michelle from Making Sense of Scents
My biggest mistake when I graduated from college is not saving for retirement right away. Instead, I experienced lifestyle inflation and didn't really give retirement a thought other than what my employer gave as retirement benefits. Instead, I should have started saving and maxing out my retirement accounts right away in order to build good habits and because I definitely could have!
- Michelle Schroeder-Gardner
Blogger, Writer, Making Sense of Cents
Kimberly Blanton from Squared Away Blog
1. After college at Indiana University in Bloomington, I moved to Chicago for a writing job. Every day, I walked from the Randolph Street train station up Michigan Avenue and past many department stores to my job. I spent a lot of money on clothes at lunch and on my way back to the train at night!
2. I started my career in Chicago in the early 1980s. This was well before 401ks were pervasive, and my employer didn't provide a pension. But they did have a profit-sharing plan. When I left the job in my late 20s (in 1988), I got $15,000 from the profit-sharing plan. I spent it. You can find a calculator and figure out what it's worth today and how much it would've added to my current retirement savings.
3. Lucky for me, I didn't have any college debt - but most of my friends didn't back then when college was affordable.
- Kimberly Blanton, Squared away blog
Todd Tresidder from Financial Mentor
The biggest mistake I made when first getting out of college is not immediately investing in rental real estate.
Rather than rent an apartment, figure out how to buy your first positive cash flow 4-plex using fully amortizing, fixed-rate financing. Then rinse and repeat that strategy 4 times. If you have to, beg, borrow, or negotiate that first down payment to get started. But get started early to make that loan amortization and inflation work for your wealth.
It’s the simplest, most secure plan for early retirement you can create. It requires minimal skill or expertise compared to alternatives. The sooner you start, the sooner you’ll be financially secure.
Conversely, the smartest thing I did after getting out of college was invest in my earning capacity. The lifetime compound growth equation is ruled primarily by your savings ability (defined as earning capacity less lifestyle expenses and taxes). Focus on your earning capacity by investing in your career aggressively while keeping your lifestyle under control. Your savings will grow, and so will your wealth.
- Todd Tresidder, Financial Mentor
Jim Wang from Wallet Hacks
I think my biggest mistake after college was not budgeting. I never budgeted in college because I didn't make any money (not really, I had a few work study jobs and grading assistant jobs) and kept that way for the first year or so of work. When you start making "real" money, it's important to budget because otherwise you'll easily spend more than you anticipate. I tracked what I spent in a spreadsheet (today, I'd do it with with a budgeting app) but that was it, no looking back at it to see where the money was going, whether it was going to the right place, and how to reign it in. Fortunately, I was contributing a lot to my 401(k) retirement account (I was accidentally "paying myself first") so the damage was minimal but it wasn't ideal.
-Jim Wang, WalletHacks.com
Robert Farrington from The College Investor
The biggest mistake I made after college was going out and buying that new car because “I deserved it”. I bought a brand new Acura TL, and spent $33,000 on it. My monthly payments were $700 per month, and while I did have a job lined up, that was a huge amount to be paying towards this car, that honestly wasn’t needed at all. In hindsight, I should have kept my current car until it was dead, then bought a gently used car for a fraction of the price.
- Robert Farrington,
Founder, The College Investor
Jesse Cramer from The Best Interest
Due to college loans, many Americans don't have a positive net worth until their 30s. In fact, America's average net worth by age is a little shocking. Looking for a useful goal? Get out of debt in your 30s and beat the average. It'll be tough. It'll feel "lame." But your future self will thank you, and the next round of drinks will be on them.
- Jesse Cramer, Writer, The Best Interest
Jasmine Birtles from MoneyMagpie
I actually started as a freelancer and have continued working for myself ever after, so I didn’t have a real ‘paycheck’. However, the big mistake I made (and continued to make for a long time after) was to forget that the money I received was ‘gross’ and that I would have to pay some tax on it later on. It took me years to get round to setting up a separate account to put some money into each month to cover tax and other outgoings. I give talks now on how to set yourself up as a freelancer and managing money is at least half of it! I tell everyone to put at least some money aside - even if it’s just 10% of what they make so that when it comes to paying tax it isn’t such a terrible shock to find that money.
Nowadays, I run a few companies and, of course, have my own personal tax to pay and I get my accountant to work out the last year’s tax as early as possible so that I know well in advance how much I’m going to have to pay.
- Jasmine Birtles, Director, MoneyMagpie Ltd
Melissa Garcia from Consumer Queen
My biggest mistake earning my first real paycheck was not starting a savings account. If I would have put this in to practice early on, I could have had quite the nest egg saved up for emergencies.
- Melissa Garcia, Consumer Queen
Barbara Friedberg from Barbara Friedberg Personal Finance
My biggest mistake was not tracking my income, expenses and creating a budget. If I had it to do over, I'd use a tool like Quicken, Mint or Personal Capital to get on top of my finances immediately.
- Barbara Friedberg, MBA, MS, BarBara friedberg Personal finance
John from Frugal Rules
The biggest mistake I made was continuing to foolishly spend my money. While in college I racked up $50,000 in debt - both in credit cards and student loans. I was living a life I wanted, but could not afford. Upon graduating and getting a steady paycheck I continued living that lifestyle and doing nothing to start saving money and, much less, begin to attack my debt. That only added more interest to my credit card debt and left me in a precarious position in the event of an emergency. It wasn't until I was forced to face my decisions and lifestyle that I began to see that I had to begin managing my money by beginning to save and attack the debt. Ultimately, I had no plan for my money and didn't realize that, when used as a tool, you can begin to achieve a variety of goals.
- John, Frugal Rules
Ryan Martinson from What's My Payment
I am a big believer in mistakes, and I made plenty right out of college. Still do, in fact. The more I make, the more I learn from them, and the better I become. Not understanding how valuable recognizing mistakes, learning from them, and taking action is stands as my biggest macro-professional mistake.
Mistakes make us better. The big ones and the little ones. While yes, it’s important to make as few as possible. Mistakes should be embraced as opportunities to improve. I was afraid to make them when I was younger, and when I did, I refused to acknowledge them or made excuses. Don’t do that. Take responsibility and make yourself better.
- Ryan Martinson, What's My Payment
Fitz Gerard Villafuerte from Ready to Be Rich
My biggest mistake when I started earning my first real paycheck after
college was that I stopped learning new things. I thought I already
know enough to succeed in life. But I was wrong, there is indeed a lot
of stuff that they don't teach you in college, like entrepreneurial
skills and personal finance.
This resulted in a stagnant career and poor money management. It was
only when I started leveling up and studying new skills that new
opportunities opened up for me, along with being able to get out of
debt and steadily build my investment portfolio.
- fitz gerard villafuerta, Ready to be rich
Tori Dunlap from Her First 100K
"Not spending enough money! Being nervous about 'blowing it', I would often not go out with friends. I was so focused on my budget that I didn't learn how to balance spending and saving until about a year after.
- Tori Dunlap, Her First 100K
Kelan and Brittany Kline from The Savvy Couple
The biggest mistake we made after earning our first real paycheck was not starting to invest a percentage of our paycheck right away. We waited a couple of years to start contributing regularly to our retirement accounts. This caused us to lose that awesome jumpstart we could have had and got us used to living on more than we needed. Looking back we should have put that money to work for us in the market right away. For anyone that is just getting started after college our biggest piece of advice is to learn how to budget your money and make it work for you.
- Kelan and Brittany Kline, The Savvy Couple
Miranda Marquit
I think my biggest mistake when I started earning a paycheck was not taking advantage of the retirement plan at my work. While there wasn't a matching program, getting in the habit of setting aside at least some money from each paycheck would have been a big help. Plus it would have put me further ahead when building a retirement nest egg with the help of tax-efficient compounding returns.
-Miranda Marquit, Freelance Financial Writer and Money Expert, Miranda Marquit
Sean Barela from Think Save Retire
If I had a time machine and could go back in time and grab myself by the shoulders when I got my first job out of college, I would IMPLORE myself to start investing in retirement accounts immediately. Instead of putting money away in my 401k or IRA, I would take care of my bills first and then spend the rest on sneakers and happy hour. I know when you've just graduated, your retirement is one of the last things on your mind, but as someone in their mid 30's who failed to plan early on, you have to trust me when I say that you don't want to have to play catch up later on when you're trying to buy a house or have a family. The earlier you start planning and investing, the earlier and more comfortably you will retire!
-Sean barela, think save retire
Jeff Proctor & Ben Huber from Dollar Sprout
Unlike a lot of college graduates, my first job after college did not pay well at all — I was making less than $30,000 per year. My biggest financial mistake was staying with that job for as long as I did. I stayed there for over two years! I got a few raises over the years, but nothing that moved the needle much.
Looking back, I would have been better off finding a job elsewhere. I was afraid to relocate, which drastically limited my options. And I also heard the rumor that employers don’t like to see applicants float between jobs (not true!). So I stayed.
Everything happens for a reason, though. My early career and financial situation is what led me to eventually starting DollarSprout, which has turned into a better career than anything I could have ever hoped for from a 9 to 5.
- Jeff Proctor
Co-Founder, DollarSprout.com
Michael Dinich From Your Money Geek
Looking back, my biggest regret leaving college was paying back my student loans too aggressively. The prevailing wisdom is you should pay off your debt as quickly as possible, so thinking I was smart; I funneled any extra money I had to pay down my student loans as quickly as possible. Sadly, this was at the expense of building a sizable emergency fund. So, whenever an emergency did happen, I would have to pick up extra work to cover the costs.
Looking back, I wish I had set the money aside to build a massive emergency fund.
- Michael Dinich, Your Money Geek
Riley Adams from Young and the Invested
Thanks for reaching out. My biggest mistake when I started earning my first real paycheck was waiting too long to contribute more to my 401k. I barely hit one third of the annual contribution limit my first year and it took me more than 3 years to hit half of the annual limit. After 6 years, I finally managed to cut out expenses in my life and fully fund my retirement account, something I've managed to do for 3 years in a row now. After seeing how well these investments have performed over time, I wish I had contributed more at the start. If I had, I'd easily have twice as much in my 401k by now.
- Riley Adams, Young and the Invested
Mel from Broke Girl Rich
I'm sure a lot of others will echo the same sentiment, but I wish I had made a plan for my money. I didn't really think much about it at all. Sometimes I was barely getting by and sometimes extra money was just sitting in my checking account. I wish I had read just a basic personal finance book or two and had a clue about retirement accounts, emergency savings, and investments. I could've made smarter choices from the get go - and taken more advantage of the magic of compound interest!
- Mel, Broke Girl Rich
A Purple Life
After I got my first job I started putting some money into my 401(k) and thought the rest was spending money. That was my biggest mistake. The remaining dollars were not a lot, but after I job hopped and got salary increases and promotions it wasn't nothing (even while I was paying Manhattan rent). So I spent it.
I should have realized that there was a benefit to saving more than a little in my 401(k) and even a benefit to saving more in other investment vehicles after I maxed that out (many years later). Having extra money for a rainy day would have helped me mentally with the inevitable lay offs that happen often in my industry (advertising/marketing) and would have helped me not feel pressured to find a new job immediately after those changes happened. It would have almost eliminated my fear of running out of money and instead let me focus on finding the next best job for me.
Kevin Panitch from Just Start Investing
The biggest mistake I made when I first started working was buying a brand new car. I justified it as a necessary expense, but in reality, a used car would have done just fine and would have allowed me to invest and save more money right as I entered the workforce. It was not a huge mistake, but by investing that money I spent on the car, I would have been better off.
- Kevin Panitch, Just Start Investing
G.E. Miller from 20 Something Finance
My biggest mistake was rushing too quickly to purchase a home, with almost zero money down. Most of my income was going towards mortgage interest and PMI payments. And then I ended up moving within 3 years for a new job and selling the home. At best, I broke even, but had I stayed in my cheap apartment instead, I would have been able to save up a decent amount. Lesson learned: when you're younger, you should keep yourself open to job mobility. There is no need to rush to weigh yourself down with an overfinanced home purchase.
- G.E. Miller, 20 Something Finance
Philip Taylor from Part-Time Money
My biggest mistake was going out and buying a brand new SUV. The payment and insurance ate up over 30% of my income. Luckily I realized my mistake a week later and the dealership took the vehicle back. I only lost my deposit. An expensive lesson.
- Philip Taylor, Part-Time Money
Dianna Baros from The Budget Babe
My biggest mistake...was not negotiating my starting salary. I took the first offer that was given to me because I was so excited to actually get an offer -- it was a dream job with a great company. But looking back, I should have counteroffered. I started off earning less than my colleagues doing the same work and even when I was promoted within the company, I didn't earn as much as new hires. Otherwise, my money personality is a saver, so I was pretty good at paying off college debt, living frugally, and taking advantage of my company's 401k.
- Dianna Baros, The Budget Babe
from Lazy Man And Money
I'm unusual. I started investing in mutual funds in high school, around 1992. By the time I graduated college it was the middle of the dot-com bubble. A good part of my first year's paychecks went into day trading such wonderful companies like Palm, Egghead Software, and Worldcom. I probably lost more than $10,000.
Andy Hill from Marriage, Kids and Money
At 22, I bought my first home. I was so proud to be a homeowner right after graduating from college.
Little did I know the true cost of homeownership. And man, did I learn quickly!
When I bought the home, I only put 10% down so I had some pretty high mortgage payments for a guy only making $38,000 per year. My mortgage payment was around $1,200.
When I decided that I wanted to switch careers at 23 years old, I took a pay cut of about $10,000. I did not think clearly about my mortgage payment when I made that decision.
This uneducated money decision left me with a mortgage payment of around 50% of my monthly income. Add in the housing costs, that was about 70% of my income!
When all was said and done, I had about 30% of my tiny income to eat, making my car payments, watch Netflix, and get a few beers with my friends.
- Andy Hill, Marriage, Kids and Money
Marc Andre from Vital Dollar
For my first few years after college, I wasn't contributing to a 401k. I wanted to and I knew saving for retirement was important, but I wasn't making very much money and I thought I couldn't afford it. I should have made it a priority and adjusted my budget in order to make it happen. While retirement seems really far away when you're young, that's the best time to be saving because your money has a really long time to grow. I'll never be able to get back those two or three years when I wasn't saving for retirement. So my advice to others is to contribute to a 401k if your employer offers one, even if it stretches your budget a little.
- Marc Andre, Vital Dollar
Brian Meiggs from My Millenial Guide
"My biggest mistake when I first started earning my first real paycheck was not investing wisely. I used to lust to make fast money, which meant making really speculative options trades that never went my way. If I had stocked away that money index funds or ETFs it would have grown so much by now. I don't even want to do the math behind it."
- Brian Meiggs, My Millenial Guide
Keith Schroeder from The Wealthy Accountant
My greatest mistake when starting my business was thinking everyone needed to have their taxes done. That might be true, but they don't have to come to my firm to get them prepared! When I committed to full-time as a tax professional I expected people would flock to my business. Instead, I stood staring out my living room window on April 15th thinking, "Oh shit!"
I had 48 clients and $3,030 in revenue. I was young, dumb and cheap. That summer I really worked my business instead of expecting people to magically show up. My client list more than tripled each of the next two years and my fees were more in line with a working wage. In year four I turned a profit as my business continued to grow as the capital demands decreased. The rest is history.
In a nutshell, my greatest mistake starting out was thinking, "If I build it, they will come." Well, you have to let people know you built it. You have to prove your value. It takes work. Lots of it. And time.
-Keith Schroeder, Tax Prep & Accounting Services, Inc, The Wealthy Accountant
Piggy from Bitches Get Riches
My biggest mistake when I started earning my first real paycheck after college was not bothering to educate myself on my benefits. I knew I had to invest in the company's 403(b) retirement plan, and I felt very smug about signing up for that on day one. But my proactive use of my company benefits ended there and with, like, scheduling annual dental cleanings. It took a couple years before I realized that my retirement account was allocated almost entirely to Money Market and therefore, wasn't really doing much. And if you're a brand new adult with your first job and this all sounds like Greek to you... that's my point! Take the time to understand your company benefits and set up your retirement account properly, lest you miss the opportunity to get rich quicker.
- Piggy, Co-Bitch, BitchesGetRiches.com
Final Thoughts
As I'm sure you agree, there are some great pieces of advice from these experts! There's nothing like being able to learn from people who have dedicated their lives to coming up with great personal finance tips for young adults!
I hope these quotes motivate you to start saving money, paying off debt, and preparing for retirement. What are you waiting for?