Money Lessons they don't Teach you in School

In this blog post, we’ll cover crucial money lessons that everyone should know in their twenties.

These lessons aren't typically taught in school, and unless you have financially savvy parents, you might have to learn them on your own.

Here are the key financial habits and lessons I’ve learned through my twenties from wealthy individuals, online finance resources, and personal experience.

1. Avoid the Credit Card Trap

Credit cards can be appealing, almost like free money, especially when marketed with luxury and prestige. However, they can be dangerous if not used wisely. Many people fall into credit card debt because they don’t fully understand how it works. It’s essential to recognize that credit cards should not be used to spend money you don't have.

If you are smart with credit cards, you can use them to your benefit. For instance, I got my first credit card in my late twenties to build up points for business expenses. Instead of seeing credit cards as a source of money you don't have, use them to build points or credit history. Always pay off your balance in full each month.

2. Learn to Cook Instead of Eating Out

Ordering food has become incredibly easy with various apps, but it can be a significant drain on your finances. By learning to cook, you can save a substantial amount of money.

In my twenties, I learned to prepare basic meals, focusing on simple combinations of protein, carbs, and vegetables. Meal prepping can be time-efficient and cost-effective.

Eating out occasionally is fine, especially for socializing or trying new cuisines, but try to limit it. Cooking at home not only saves money but is also beneficial for your health.

3. Build an Emergency Fund

An emergency fund is crucial. It's shocking how many people lack savings to cover 3 to 12 months of expenses.

Life is unpredictable, and having a financial cushion can prevent the need to rely on credit cards in emergencies. Personally, I keep 6 to 12 months' worth of expenses in my emergency fund to be prepared for unexpected situations.

4. Start Investing Early

One of my biggest regrets is not starting to invest earlier. Investing in your twenties can significantly benefit from compound interest over time. Even if you start with small amounts, it's essential to begin as early as possible. Stocks are a straightforward way to start, and investing in an index like the S&P 500 can provide solid returns with less risk compared to individual stocks.

Investing is a long-term strategy. Look at your portfolio with a 20 to 30-year horizon to build a substantial fund for retirement or other life goals. Additionally, invest in yourself by learning new skills or starting a business, leveraging your twenties' flexibility and fewer responsibilities.

5. Be Aware of Lifestyle Creep

Lifestyle creep occurs when your spending increases with your income. It’s tempting to upgrade your lifestyle when you earn more, but it’s crucial to do so mindfully. Ensure that you’re also increasing your savings and investments, not just your expenditures.

6. Saving is Not Enough

While saving money is important, focusing solely on saving can be limiting. Inflation will continue to increase the cost of living. Therefore, consider how you can increase your income.

This might involve asking for a raise, finding a side hustle, or starting a business. Increasing your income can have a more significant impact on your financial health than trying to cut costs everywhere.

7. Learn How to Grow an Online Audience

Growing an online audience is an invaluable skill in today’s digital age. By building a dedicated following, you can create a loyal community that trusts your insights and content.

Once you have an engaged audience, move them to a newsletter. This allows you to build an asset that you own and can monetize.

A newsletter provides a direct line of communication with your audience, free from the whims of social media algorithms. You can monetize your newsletter through sponsorships, product sales, or premium content.

Building and nurturing an online audience is not just about immediate financial gain but creating a sustainable and scalable business model.

I teach how to grow, monetize and automate a digital creator business in the Digital Creator 2.0

Final Thoughts

Your twenties are a foundational period for building good financial habits.

Avoid credit card debt, learn to cook, build an emergency fund, start investing early, be cautious of lifestyle creep, focus on increasing your income, and learn how to grow an online audience.

By incorporating these lessons into your life, you can set yourself up for long-term financial success.