Back home, we say that: “the dad who doesn’t love you leaves you to do things he couldn’t do”. This is probably the worse translation of this Burundian proverb, and for that, I apologize in advance!
I love my munchkin with all my heart. The hopes I have for her are based on the opportunities that are available for her. I was able to do some of those things myself, but I wish I have someone who had been there to show me the way. My upbringing was different, and I did come to the USA until I was already in my 20s. I hope that what I’m showing/teaching her will stick with her into adulthood.
This is not just for my daughter, it’s for all young adults starting their financial journey. Sometimes we do not think about these out of ignorance or because we do not consider them urgent. Unfortunately, we pay the price later in life and wish we knew or did something different when we were young.
#1 SAVE MORE
I am a firm believer that you should have a job while in college (unless there is a medical reason why you cannot). Working while still in school has so many advantages: earn money, learn time management, stay out of trouble, understand the value of a dollar by purchasing your necessities, etc. The perfect time to save as much as you can is when you don’t have a lot of responsibilities (no house, no kid, no spouse).
#2 TAKE fewer STUDENT LOANS
I have been saving for my daughter’s college since she was born and hope that by the time she goes to college, she will have a little something to help her. My story was different; I did not have savings set up, and I took loans. I understand this might not be an option for a lot of people but hear me out.
You can reduce the amount of loan by applying & qualifying for grants or scholarships and by not accepting every loan that they offer to you. Only take what you need to cover tuition. The idea that students get their living expenses covered by student loans appalls me. What are they thinking! Student loans will stay with you forever; you can’t even get rid of them by filing bankruptcy!
#3 START INVESTING FOR RETIREMENT
Who is thinking about retirement at 20? Very few! But the fact is, time is your absolute best friend when it comes to investing. The benefits of an early start cannot be made-up by bumping contributions later. Besides, why would one want to retire at 65 when you can retire at 50? Starting to invest early gives you the flexibility that most of us won’t have.
#4 BUY A CAR WITH CASH
A car depreciates as you drive off the dealership. It makes no sense to finance a depreciable asset. Plus, I would probably be her first car, so why buy an expensive one. My recommendation here will be to buy used and with cash. Debt is something I am teaching my daughter to avoid at all costs.
#5 PURCHASE A HOUSE
Because, why not? The early 20s is the time to find oneself and decide where you want to live, what you want to do. By the late 20s, you should settle in one place and make a homeownership investment.
The earlier you buy, the earlier you will be able to pay it off, and you will not have to worry about mortgage in your retirement years. A mortgage is the largest monthly expense for most, and having no mortgage will free up so much cash for investing and wealth building.
I am working on my millionaire status, and I hope my daughter will get there much sooner! Financial freedom is something I value and wish for every one of you.
“It’s not what you do for your children, but what you have taught them to do for themselves, that will make them successful human beings.” Ann Landers
