Smart SpendingSmart Spending

5 smart money moves in my 20s

A personal finance blogger credits these decisions for his comfortable financial situation 2 decades later.

By MSN Money Partner Sep 14, 2012 9:56AM

This post comes from Rob Berger at partner blog The Dough Roller.


Image: Money jar. Copyright: Big Cheese Photo, PictureQuestMy wife and I just sent our first child off to college, and we'll send our second to college next year. Through all the things that go with this time of life, I've been very focused on teaching my children sound money-management principles.


And the process made me realize just how much the decisions my wife and I made in our 20s affect our finances today in our 40s.


We're not quit-your-job rich, but we are comfortable. We have no debt other than our mortgage. We paid cash for our last car (a used Toyota Camry hybrid). We have money set aside for our children's college education. And we are on track to retire.


So if you are in your 20s or know somebody who is, here are five decisions that made all the difference:


1. Earned a valuable degree

Last weekend I attended FinCon12, a conference of personal finance bloggers. One of the speakers was MSN Money columnist Liz Weston. One point she made is that not all education loans are "good debt." Amen.


As Steven Covey said in his best-selling book "The 7 Habits of Highly Effective People," you must begin with the end in mind. Once you get the degree you are pursuing, what will you do with it?

If art history is your passion, that's great. But recognize that a four-year degree from a private institution could cost north of $200,000. If you borrow that money, you'll likely spend decades repaying it. That's bad debt.


In my case, I earned a law degree, graduating in 1992 with $55,000 in school loans. Contrary to popular belief, not all lawyers make a fortune. But it has been a rewarding career that has more than paid for the cost of the diploma. And yes, my school loans are now paid in full. (Post continues below.)

2. Avoided consumer debt

My wife and I were by no means perfect in this area. We had some credit card debt during the early years of our marriage. In fact, I wrote a series on how to get out of credit card debt for that very reason.


But here's the thing: We never racked up debilitating amounts of consumer debt. We didn't fund vacations, jewelry or expensive clothes with our credit cards. Debt that doesn't add a non-depreciating asset to your balance sheet of equal or greater value will quickly become a financial burden.


3. Began investing early

Even if you have debt, I believe you should begin investing with your first job. With a 401k, you can invest as little as $25 a month. If you don't have a 401k, you can begin investing with very little money with companies like Betterment. When I got out of school, we began investing in a 401k even while paying off debt, and it became a habit that has stuck with us ever since.


4. Bought modest vehicles

Don't drive your paycheck. It's tempting to buy a car based on the payment you can afford. But the money that goes to your car will set you back later in life.


I can recall vividly my wife and I going to buy a car for me a few years after law school. We had only one car for several years, and I took the bus and subway to work. I was looking to buy something sweet, but she has always been more frugal. Here I am, a lawyer at a big, fancy law firm in Washington, D.C., and guess what I drove off the lot. It was a used Ford Escort with manual transmission and hand-crank windows. It was the right decision. Thanks, Mrs. Dough.

5. Maintained good credit

This one was by accident. Back in the early '90s, you couldn't get a credit score online. There was no "online." Heck, I didn't buy our first cellphone until 1995. So I had no idea what my credit score was.


But we paid our bills on time and didn't rack up too much debt. As a result, we got a great interest rate when we bought our first home, got an even better rate when we refinanced and got a great rate on our auto loans (we couldn't afford to pay cash for cars until more recently).

Credit scores may seem boring, but they have a huge impact on your finances. Monitor and protect your score with care.


If you are in your 20s, I hope you'll give some thought to the above as you make decisions for you and your family. Trust me, you'll thank me 20 years from now.


More on The Dough Roller and MSN Money:



Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.