‘How To Get Rich’ Star Shares His Best Piece Of Wealth Advice For People In Their 20s
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Reflecting on your 20s with regret (of any kind) can be a bitter pill to choke down. This period of life marks a time when youthfulness reigns, and making the most of the moment is a top priority. However, striking a balance between work and life that will enable you to reminisce on your 20s with joy and not remorse can be challenging. It is a thin line to tread.
Financially speaking, your 20s are a critical time that demands careful consideration. During this phase, you may be earning the highest income you’ve ever made while shouldering new financial responsibilities. Additionally, you may be grappling with multiple financial goals, such as pursuing higher education, building wealth or purchasing a home.
Not only does 20-something life feel like a tightrope walk, but when you add financial pressures in, all of a sudden you’re juggling on that tight rope, too.
Recently, Ramit Sethi gave his two best pieces of advice for people in their 20s to CNBC Make It.
If you’re unfamiliar, Ramit Sethi is a renowned author and personal finance expert, recognized for his show on Netflix How to Get Rich and his book “I Will Teach You to Be Rich”, which is kind of just another way to say “How to Get Rich.” I digress…
Through his popular show, website and podcast, Sethi offers valuable insights on entrepreneurship, career development, and personal finance. Sethi is famous for his practical and straightforward approach to managing finances, and his focus on automating financial systems. He has received widespread recognition from notable media outlets, such as The Wall Street Journal, The New York Times, and CNBC.
Ramit Sethi’s Best Financial Advice For Young People
“My best advice for people in their 20s when it comes to money is to set up an automatic investment,” Ramit Sethi, self-made millionaire tells CNBC Make It.
So simple and yet as of last year, 56% of people could not cover a $1000 emergency.
That said, the math behind starting to invest while your young is irrefutable. If you invest as little as $500 per month at age 22, by age 60 you will have over $1m (assume a 7% average annual return). Now, $1m in 38 years might not have the purchasing power as $1m does today, but it is certainly better than being one of the 56% of people who have less than $1000 for an emergency.
Sethi’s second best piece of advice for people in their 20s comes full circle to what we mentioned at the top of this post.
“Don’t try to be 40 before you’re 40,” he says. “Your 20s are about getting to know yourself, going out with friends, taking cheap trips — I think you should do that. There are certain things you can do in your 20s that you will never be able to do again, and I encourage you to embrace that. One of my regrets looking back is that I didn’t have more fun.”
On careful examination, there’s a significant lesson to learn here. Sethi isn’t suggesting that you should prioritize money over life experiences, but he does raise a valid point about potential regrets if you fail to enjoy the journey. You’re unlikely to regret not purchasing a luxury car or $5,000 watch while your income is low. But what you will regret is missing out on those life-long memories with friends or loved ones. So when it comes to picking between material possessions or that friend’s trip while everyone is still untethered, choose wisely.