A training for 20-somethings

It’s time to get your money in order.

Maybe you’re in your early 20s and struggling to make ends meet, or maybe you’re adjusting to a job that finally provides you with financial stability. But regardless of the circumstances, what everyone has in common is the desire to make the best financial decisions.

This week, we’ll help you get started.

It would be nice if there was a comprehensive course that prepared us for this crucial aspect of our lives – something like Financial Adulting in American Capitalism. But we are often left to figure this out on our own. How do you cover your expenses on a starting salary? Should you focus on paying off student debt instead of saving for retirement? What kind of health insurance do you need – and how much should it cost?

Our five-day financial boot camp will help you solve all these big problems in digestible snacks. Every day we’ll ask you to complete a small task that will point you in the right direction. (Today’s action item will appear at the end of this note.)

Your guides will be Ron Lieber, columnist for Your Money; Tara Siegel Bernard, financial reporter; and Mike Dang, personal finance editor. Together, we have more than half a century of experience writing and thinking deeply about these topics.

And we all survive our twenties.

  • Think about the aspects of your financial life that give you the most anxiety and those that give you the most hope. Write everything down and make a list of things you want to improve or optimize. (And it’s okay if you’re overwhelmed and don’t know where to start; that’s where we come in. We’ll give you lots of ideas along the way.)

  • Make sure you have a copy of your pay stub on hand and make a list of all your active financial accounts, along with their usernames and passwords. These may include: current, savings and other bank accounts; all accounts related to student debt; budgeting apps; 401(k) and individual retirement accounts; and health insurance.

  • Do you have a burning money question you want answered? Ask us here.

Before we begin, we want to share a glimpse of what our 20s were like for us.

When I was in my early 20s, I had just finished a degree in journalism and was working as an investigator and fact-checker for less than $30,000 a year when the US housing market collapsed and the Great Recession followed. I had about $70,000 in student loans, which I started trying to pay off while also helping my immigrant parents with some of their bills. Many people were suddenly losing their jobs and homes – it seemed like such a dark and scary time.

I didn’t know much about money, but I wanted to learn. I wanted to make smart decisions, but I also wanted to feel like I could make some financial mistakes occasionally without beating myself up about it. I put some trips I couldn’t afford on my credit card, reasoning that I would have to live a little while I was young and free. It was also around this time that Suze Orman, one of the biggest names in financial media, hosted a television show where she told people whether or not they could buy the things they wanted. I had nightmares where she screamed at me for wanting anything other than food or shelter.

How do you save for retirement when you’re also trying to pay your monthly bills, get rid of student loans, and help your parents? This is the kind of question I asked myself, and ended up answering, when I was in my 20s and reading things like this newsletter.

When I think about my first decade of work, from 1993 to 2003, I mostly feel grateful.

I was lucky to get a cheap rent—$260 for the second-largest bedroom in a five-bedroom house in Somerville, Massachusetts, and then about $600 for my share in a perfectly nice two-bedroom house in Brooklyn, at a discount. because it was on a noisy street. less than a block from a prison.

I was fortunate to find an employer, Time Inc., in 1994, with a 401(k) plan and matching contribution. There, I was lucky enough to meet a colleague on a Saturday afternoon when we were the only ones in the office. Feeling chatty, she showed me her 401(k) statement – ​​six figures – and encouraged me to stick with the program.

I was fortunate to have a father who was an Army veteran and a customer of USAA, a bank that primarily serves U.S. military personnel. The bank’s magazine published the first chart I saw showing the power of compound interest. Start young and save as much as you can, he advised. I did.

I was lucky to get into college with generous financial aid. I graduated with $8,000 in student loan debt and managed to keep up with the payments, even on a journalist’s salary in New York.

The skill would come later, but I don’t give myself much credit for the learning I gained from books, much of it on the job. That was also kind of very lucky, being able to work in places where experts would pick up the phone and talk to me.

“Try to be lucky” is not particularly helpful advice, but it is more important than many qualified people recognize.

Take a trip with me to late 90s New York. Bill Clinton was president, Rudy Giuliani was mayor, and I got my first job out of college – as a reporting assistant – for about $32,000 a year. Dot-com stocks were all the rage.

The real estate market was on fire, or at least that’s how it felt when I was in my early 20s trying to rent an apartment in Manhattan. You had to attend busy open houses, checkbook in hand, to cover your credit report and deposit. I ended up getting a small, rent-stabilized studio in the West Village for $877 a month.

I remember writing down my monthly expenses in a notepad, trying to figure out how I was going to make it all work on my take-home pay. I probably saved enough to get a 401(k) match, but not much more.

There wasn’t much wiggle room anyway, and larger expenses—a laptop, vacations—sometimes hit my credit card. It didn’t feel frivolous, but it didn’t feel good either. Those days served as some of my basic lessons about money.

I’m not sure how much I would change from my 20s even if I could. But I wish I had been able to see a little further, beyond that specific moment – ​​perhaps even taking a few more financial risks.

Tuesday: Meeting yourself where you are: Whether you are a student, looking for a job or working, we have some tips for you.

Wednesday: Budget for the haters: Budgets are a statement of values. Once you see them this way, examining how you spend becomes something of a centering exercise.

Thursday: Managing Debt: How to think about paying off debt (without all the shame).

Friday: Thinking about the Future: Savings, retirement and setting reasonable goals.