The 5 Priorities of Personal Finance in Your 20's

Stratty X
Stratty X
Jul 26 · 3 min read

Things you should prioritize when you’re in your twenties.

PLEASE FOR THE LOVE OF ALL THAT IS GOOD GET RID OF DEBT AND BAD SPENDING HABITS FIRST!

Before you can start building up a healthy investment portfolio, it’s more important to first pay off your debt and kick bad spending habits first. While having a good high earning job, some help from family, and an investment account can help you increase your net worth, it usually isn’t enough to offset the tolls of high-interest rates on credit cards and other loans you may have in your name.

If you absolutely must start investing, start with only a small percentage (say, 1% of your income) and put a large percentage of your income toward paying off debt first. As your debt shrinks, you can increase the percentage you contribute toward investments.

Start investing as early as possible.

One of the greatest wonders of the world, aside from the Seven New Wonders, is the concept of compound interest. In fact, Albert Einstein himself dubbed compound interest as the eighth wonder.

In fact, Albert Einstein himself dubbed compound interest as the eighth wonder

Unfortunately, a large number of people have no idea and take no advantage of compound interest.

The earlier you start investing, the more — much more — you’ll end up within the long run. Even just skipping out on investing $36,000 over ten years can cost you more than $500,000 in returns. To take full advantage of compound interest, start investing as early as possible. Even $20 a month can work wonders over time.

Automate your investments.

Arguably, one of the biggest reasons why people shy away from investing in the first place is because it seems like such a complex and intimidating beast. Luckily, technology and advancements in the investing world have made it much easier to invest without worrying about numbers crunching and hassle.

If the idea of investing is terrifying to you, you might want to try automating your investments. Strategies such as automated trading, automated hedging, and the use of clever online bots can help you invest without much thought. Many tools exist in the space to meet your personal profile as an investor and help you fulfill your investment desires.

Take greater risks while you’re young.

When you’re in your twenties, you probably don’t have a mortgage, large family, and other expenses and responsibilities to tend to. This means that you are much more tolerant of risks, such as stock trading and investing your time in a startup (See the founding team of StrattyX for reference). Building up a healthy savings account is not as effective as putting the funds to work in some investments. You can invest in some of your favorite companies that you personally support. With great risk comes greater reward. This is true in investing and every other area of your life.

Invest in yourself, constantly.

Regardless of how old you are, one of the best investments you could ever make that almost always has a positive return is investing in yourself. No, this doesn’t mean invest in all the clothes, food, and fun you want for yourself.

Rather, investing in yourself comes in the form of buying self-development books, attending live seminars or conferences, signing up for educational courses (Shout out to our favorite CS professor David Malan), booking time with a mentor, and more. These types of investments in yourself will improve your financial knowledge, which will, in turn, equip you to make great financial and investment decisions as you move forward.

Written by Peter Manley. Edited by Auriel Wright.

A series hosted by quant software company, StrattyX, on Gen Y and Gen Z Peer Financial Education.

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Stratty X

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Stratty X

Quant tools for everyone. www.strattyx.com

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