What You Had To Offer The 20 Year-Olds

In Articles, Income Planning, Investment Management, Retirement Thinking, Weekly Articles by Adam Cufr

I asked and you responded. If you read last week’s article (click here), you know that I asked you to consider this: I’d like to hear what financial advice you’d give a 20 year-old, and pretend they’d actually listen and implement some of what you suggest. Well, the responses were great, so great, that I thought you’d like to read what others wrote.

So this week, I’ll let you do the talking. I made some minor revisions in order to hide names and any specifics that you may not wish the world to know. Otherwise, these are your words, on a topic that is near and dear to us, and hopefully to the 20 year-olds who could benefit so much from reading your advice.

What Financial Advice Would You Give a 20 Year-Old?

AB says:

  • More difficult today, but try to choose a career path that provides a higher probability of future employment (hopefully, it also aligns with one of your passions)
  • Create a monthly expense budget that is less than your income
  • Save a minimum of 10% of monthly income (line item of budget), always maximize company matches & invest in the equities market
  • Make sure that you can reasonably handle your mortgage payment if you choose to buy a home (no more than 25-30% of monthly earnings)
  • Purchase quality used vehicles instead of buying new, as a general rule
  • Always pay off your credit card balance to avoid interest charges

KM says:

As soon as you have access to a 401k, get in it at 10%.  Or at least go to the % that they match.  Then every time you get a raise, bump it up by 1%.

RD says:

At age 20 I didn’t give retirement much of a thought. It just was too far off and didn’t seem realistic. I also thought I’d just keep working till the end. Retirement just never seemed real.

So I guess my advice would be to talk about retirement, at an early age, and encourage saving for it, at an early age. Start saving, even if it’s just a little, beginning with the first real job they get.

JN says:

Invest in a 401(k) plan now!!!!  Don’t wait until you’re 30!!!!

RC says:

This is nothing earth-shattering, or nothing you don’t already know, but it’s what I tell my girls:

  • Start NOW.
  • Pay yourself first. Make sure you are saving something from every check you get.
  • Take advantage of whatever retirement savings opportunities you have, whether it’s a company match 401(k) or not. Saving in some tax-advantaged vehicle is critical to retirement savings.
  • Do a budget every month, and live on less than what you bring in.

MH says:

As to your question of what I’d tell a young person (with assumption they would listen):

  • First and foremost, look to the Bible for guidance in all you do…this applies to all things in life, not just the financial (took me a long time to fully recognize this).
  • Start saving and investing early (as soon as you get your first job…even if just your part time HS job).  We all feel we do not have any extra to put aside, but put it aside first and make do with what you have left.  You will find a way to make do with what is left over after paying yourself and also giving a piece back to God.
  • Avoid investing in things you have not taken the time to understand.  Example….if you have not taken time to study the steel industry, how it works and the factors that drive it, stay away from investing in it.
  • Be open to unique ideas, but study them before jumping in.
  • Stay aware of what is going on around you….example; if everyone you run into is talking about how they are making (or are going to make) “a killing” in a certain market segment (think dotcom of the late 1990s and early 2000), the train has likely already left and you’re likely to now be run over than be on it.

DF says:

Think before you use that credit card: do you really need that item? Message to young gals: have your own income that also provides healthcare and retirement options. Get all the education you can get. Never live beyond your means, or rely on your entire paycheck.

CC says:

My words of wisdom…I wish I’d listened to my own advice.
Keep good relationships with your family and live with them until you can put $2000 into a mutual fund. Then move out and get your own place. Sucking it up with Mom & Dad will really help when you’re older.

When you have a child, do what you can to put at least $1000 in an account towards school or future needs. Let them see the balance annually, but never touch it.  This will hopefully give them some interest in personal finance.
Find methods to show them how your finances work. You don’t need to show the exact money, but you can help them understand where your family money comes from and where it goes to.

Remember, if you have existing loans, anything you do is on borrowed money.

DZ says:

Adam:  Happy to throw in my two cents worth.  Four thoughts:

1.  Buy a less expensive house as soon as you have a down payment, instead of wasting money paying rent on a fancy place to impress your friends!

2.  Have one credit card in your name to establish credit, and pay off the balance in full every month.  If you can’t pay in full every month, burn the credit card and pay cash for everything!

3.  Don’t leave college with 100K in debt.  Consider working part-time during your studies, and take a little longer to graduate, but be debt free!

4.  Don’t buy that new car right now.  Get a three-year-old used car with a warranty and save half the cost of a new one, with half the payment each month!

Adam, I didn’t necessarily know all this when I was twenty, but my conservative thinking got me pretty comfortable by the time I became a grandpa.  If I had a twenty year-old child or grandchild, I’d push these ideas very hard!

JP says:

Start a 401k and contribute every payday.  Your money will never be more powerful than what you “squirrel away” when you’re young.  Keep adding to it always, never allowing yourself to break from the habit, and never use it for tough times in the future, not a new car, not a wedding, NOTHING.  “If you think you’re broke now, wait until you retire and don’t have any more (earned) income.”

Also, I read a financial article years ago by a financial guru who stated that when raising young children (like starting at 5 yrs old), his advice was that they should be given $1/week allowance for every year they are old. For a five year old this would be 5 years x $5/wk=$25/month. That adds up quickly and appeared to me to be too much for young kids to handle, although his point was that the child would have to pay for everything they needed (with parents’ guidance only, of course) including school lunches, clothing, etc.  I’m not sure I ever agreed with that, but I understand the point was to teach them how to budget, which many young adults don’t know how to do.  That’s just my two cents…  🙂

MN says:

Tell 20-somethings to put 5-10% of their income in a retirement account and not touch it for 40+ years.

DR says:

SAVE! SAVE! SAVE! Make sure to contribute to a 401K plan, even if just a small % at first. Today’s 20 year olds will not have a pension in all likelihood, so a 401K is one of their only options for saving for retirement. I would encourage them to make sure they treat their contribution like a bill…in other words, it is something that you have to pay every month.

Another suggestion is to increase your contribution every time you get a raise. I always found it helpful to split the raise 50-50. If I got a 3% raise, I kept half and increased my contribution by the other half. That way I had a little extra now and a little extra later.

Truth is, when you are 20, you don’t spend a lot of time thinking about retirement and when you do finally get there, you maybe wish you’d spent a little more time thinking about it!

KS says:

I’m sure this isn’t new and you’ve heard it 100+ times in the last 5 minutes 🙂 but start saving for retirement now – regularly, systematically & automatically (payroll deduction), even if it’s $5 per week. Just like taxes, out of sight, out of mind and you’ll find a way to live without it.  That’s all I got, not too deep, but simple to understand! 🙂

RS says:

What an open question…where do I begin?


I think the biggest problem with investments and savings is rooted at the lack of education to the youth of yesterday, and today too.

No one [maybe someone, but not the majority] sits down with their children and discusses savings, investments, long-term savings and retirement. To many of today’s youth, that’s 40 years away, and it can wait.


Our Northwestern Mutual Representative told me a single phrase: “You can save a little money with a lot of time, or you can save a lot of money with a little time, and you will end up at the same place”.

What a powerful statement. Time is going to be there, use it. An IRA of mine is a perfect example: invested $8,000 years ago and it is worth $70,000 today with no effort on my part but to be patient.  Only wish I would have kept feeding it along the way.

A line that keeps [my wife] and I in touch with our financial planning is: “In order to have more, you need to want less”. It works. Yes, we could have snowmobiles, a bigger boat, new cars, bigger house, and other toys, but we chose to save and be simple…now we are comfortable in our early retirement. A lot of our friends are not, as they still have loans or mortgages to support in retirement.


The problem should be addressed in high school, with people like yourself [leave your business cards and products you sell behind] giving classes on investments to students. Show them spreadsheets and forecasts of a simple car loan, or house loan. Let them learn to maintain a budget monthly cost (i.e. Mortgage, Electric Bill, Water Bill, Gas Bill, Car Payments, Student Loans, etc.). Then log their incomes from a job they see themselves in 5 years from now. These values can be from their actual parents’ expenses or the instructor can be creative and present bills (values) to the students to log. Then, after a few months, let them compare their savings with their debt.

I worked with several young engineers at O-I, who were so far in debt with student loans and then new car payments on top of that, and then rent for an apartment. These young people will never see the light in time to start a solid saving program, and today’s Industries are not offering any pensions like they did back in the good-old-days.

The youth today need to be made aware of investments, and if they took investing as seriously as most take college and NFL football, there would be some great investing going on.

CR says:

Interesting timing…I was just talking with my daughter last night as she is considering buying a condo while just starting grad school. Here are a couple things that we discussed:

1) Find a way to start saving, at a minimum, what your employer will match if you’re lucky or astute enough have a job with that benefit. Try to start with at least 10% of your paycheck…after a couple months you will learn to get by without it. Learn the value of compounding interest! I still put away 10%, my employer adds another 7% and because of compounding interest and a favorable stock market, my money working for me will add 5X what I and my employer add.

2) Just because the bank will qualify you for a large mortgage doesn’t mean you need to go that high. And don’t let the real estate agent push you higher. There is more to life than a nice house…don’t become a slave to the house (or your mortgage). Buying at the low end will allow you more money for additions and renovations later to make your home yours. Along with a bigger home comes bigger expenses (taxes, heating/cooling, maintenance, etc)

3) Live modestly…you don’t need to be the first with the new gadget. If you wait a little while, the price typically comes down and the quality gets better. Let someone else deal with the ‘bugs’.

4) Research early for costly items…before you need/really want something. That way you will know if you are getting a good deal when the time comes rather than just being an impulse buy.

There’s my 2 cents…(hey…2 cents is a start right?)

In Summary:

Thanks to everyone who took the time to share insights with the rest of us. A number of you also shared how you thought we might reach the younger generation with these ideas. As we work through various options, we’ll let you know what ideas rise to the top.

All the best,

Adam Cufr Signature

Adam Cufr, RICP®