I’m taking those with me into my thirties and beyond.
Money habits and beliefs are first formed in childhood. As we grow up, we reinforce some of those beliefs, others, we rewrite altogether.
The best time in life to start putting your money beliefs to the test is in your twenties, when you’re out of the house and managing your life by yourself.
I have certainly learned a lot of important lessons about money in my twenties, and these are the ones I’m making sure I carry with me into my thirties and beyond.
There’s no need to be afraid of money
Money shouldn’t terrify you.
I have to admit, I come from a somewhat privileged background.
There was a lot of frugality in my house growing up. As a kid, I heard “no” far more often than “yes” whenever I wanted anything. Even though we kept our lifestyle cheap and simple, and we didn’t have extra money laying around, we never really had the fear of not having enough to eat, or of suddenly losing the roof over our heads. And I recognize that’s privilege.
I can’t imagine what it’s like to live with any of those fears.
That said, what a lot of people don’t realize is how their fear of money keeps them stuck, sometimes even more than the fear of not having enough.
Fear of money is subconscious. It tells you that whatever you have, as long as it’s keeping you alive, is enough. If you make more, you’re not sure you’ll be able to keep it. You don’t know how you’re supposed to pay taxes on any more than what you have. And more importantly, you’re afraid you don’t deserve it.
That’s your imposter syndrome kicking in, stopping you from doing a great job and getting that big promotion with the awesome raise. Are you worth that much money? You’re not sure. You’re afraid not — as well as you’re afraid of the money itself.
In my twenties, I had to face the reality that my work is worth a lot more than I thought. I’m not making millions, but I have been given plenty of opportunities to understand and accept just how much my time and effort is worth, and to be comfortable with how much I should be aiming for in the future.
Money comes when you least expect it
— as long as you relax and do the work.
Job offers and opportunities to make money have always come to me when I least expected them. It would happen whenever I was the most relaxed about money — even though I was broke — and at my most confident that something would turn up.
I would keep my eyes and ears open, make some inquiries, and sooner or later, an opportunity would present itself.
Whenever I was worried about the situation of my bank account, and feeling negative about the possibility of getting a job, however, that was precisely when nothing happened.
To make matters worse, the more I felt the need to save money — because nothing was coming in — the more I avoided going out with friends, buying stuff I desperately needed, or having any fun. As a result, I felt like I had even less money than I actually did.
Whenever I relaxed with my money through small gestures, like buying a friend a beer, or going out to see a sports game, or inviting someone to see a movie, the more I received opportunities to make back what I had spent — and then some.
I’m not advocating that you spend without thinking — you should have a budget and stick to it. And you should aways save. All I’m saying is that a scarcity mentality attracts more scarcity, while being confident about your ability to earn will make people want to be around you, trust you, and ultimately reward you with the very opportunities you seek.
Understand your triggers
Human beings have triggers for everything. When it comes to money, our triggers can push us towards savings, or towards spending. Some of those triggers are benign. They help us either plan for a rainy day, or enjoy ourselves from time to time.
Those triggers, however, aren’t always accurate. Sometimes, they can take us to extremes that are neither safe, nor healthy — for our finances and our mental health.
You have to learn to identify the triggers that lead you to either overspend, or save in excess (to the point of doing crazy things, like having a poor diet, or staying sick just to avoid spending money — that you have — on healthy foods, or on a doctor’s visit and some meds).
Your twenties is the perfect time to become self-aware about your money triggers, so that you can enter your thirties with a healthier perspective on how to manage them.
Your lifestyle doesn’t have to accompany your pay raise
Perhaps you’ve heard this one before, but one of the biggest money mistakes people make is to mark a pay raise by increasing their cost of living.
Accompanying a pay raise comes a new phone, regular visits to expensive restaurants, a lease on a new car, or even a mortgage on a home. It makes sense, you might think, that if you’re making more money, you should be allowed to spend more money.
The problem is that making those lifestyle changes at the wrong time might make you feel like you’re perpetually living on a tight budget, and that no matter how much you work — and how big are your raises — , you’re still living paycheck to paycheck.
Big lifestyle changes at the wrong time leave you with very little left to save, invest, and barely no wiggle room to be spontaneous with your money.
Money is a tool
This is by far the biggest lesson I learned about money in my twenties. I had heard that money is a tool many times before, but it wasn’t until I felt the difference it makes in practical terms that I internalized the lesson.
Seeing money as a tool liberates you to invest in yourself. It teaches you to make better decisions regarding optimizing your time, energy and resources.
When money is a tool, your decisions about money become a lot less emotional and a lot more logical, which is an important step towards mastering money.