The 20s are your life’s prime years.
I love my 20s because they have made me who I am today.
Yet, there are many things I wish I understood in my 20s, in particular, the sad truth that, I shouldn’t have spent the money I didn’t have to buy the things I didn’t need to impress the people I didn’t care.
Lucky me, I still manage to have a comfortable life now despite some of my poor financial choices.
But if I could go back in time and give some financial advice to my younger self, it would have been the followings.
1. Pay Yourself First
First of all, time and the power of compounding — two essential factors for wealth creation — are literally on your side in your 20s.
You might be wondering exactly how this is investing, so let me tell you more.
See, investing is not all about directing money to an income-generating activity.
Putting money aside whenever a paycheck comes in is actually investing, in this case, in yourself.
To make it work, you need to commit a certain portion of your money — I recommend more than 10% of your paycheck — to saving, no matter what.
Even if the world is crumbling, that money should just go to your savings account.
This is also your emergency fund, and you should save at least 3–6 months of living expenses.
It might seem challenging, but you can make it easier and seamless by setting up automatic contributions.
This way, before you can think about how to spend that money, it has already left your account.
That’s what I mean by paying yourself first.
An early start in your 20s gives your savings more time to grow and enables you to take advantage of compounding.