Financial Literacy in Your 20s: You’re Not Bad With Money
You’re not bad with money. You were just never taught how to use it. For example, you were taught how to earn it, not how to grow it. Likewise, you were taught how to spend it, but not how to invest it. Instead of learning how to make it work for you, you were taught to chase it. Overall, you weren’t taught about investing, only about surviving. And it’s not your fault you didn’t know, but it’s your power to learn now. That is why financial literacy in your 20s is such a powerful place to start.
Financial Literacy in Your 20s Is Something We All Learn Far Too Late
It’s everything I wish I knew about money in my 20s. Now, whether you’re in your 20s, 30s, 40s, or 50s, I believe that financial literacy is something we all learn far too late. In fact, it’s something that some of us never learn at all.
You’re Scared to Look at the Number
And chances are, if you’ve turned up here, there’s a part of you that’s also avoided money. For instance, I’m guessing you don’t like looking at your bank statement. Maybe a part of you wants to put it away. You may also skip checking how much you’ve saved because you’re scared. Simply put, you’re scared to look at the number, and it’s hard to face.
It’s Not Your Fault
And here’s what I want to start by telling you. It’s not your fault. You were never taught how to do it, so it’s not something you should know how to do. I think we all feel like we grow up and all of a sudden we’re paying rent. Then we’re paying taxes. On top of that, we got to figure out what a mortgage is, and we have no idea how that works. After all, everything has interest.
Take the Pressure Off
So, I want you to take the pressure off and I want this to be the start of you changing your money mindset. I want this to be the beginning of transforming your relationship with money. That’s the main thing I want to focus on here. Currently, you have an avoidant relationship with money.
Secure, Anxious, and Avoidant
There are three types of attachment styles in love: secure, anxious, and avoidant. And I believe that those three attachment styles are also our attachment styles with money. Specifically, we either feel secure talking about money and what it is. We feel anxious talking about money and how much we make, save, and spend. Or we avoid it all together. Which one of you?
Money Is the Root of All Evil
We’ve all been taught this myth. I’m sure you’ve heard it before. Money is the root of all evil. However, you know what’s really interesting about that? When you actually check the actual reference, the actual quote is the love of money is the root of all evil. Notice how different that is.
Money Itself Is Energy
It’s not that money is the root of all evil. Rather, it’s the love of money that’s the root of all evil. Specifically, it’s the obsession, the lust, and the greed after it that’s the root of all evil. But money itself is energy. In fact, money is a resource, a universal power, and a currency.
Transforming Our Relationship From Avoidant to Anxious to Secure
But when we get lost in this belief that it’s bad, it’s negative. As a result, our relationship with it becomes anxious and avoidant. When we feel it’s unhealthy, we’re not being told to not master our money. Instead, we’re just being told not to fall in love with it and think it’s the be all and end all of everything. That’s the beginning of transforming our relationship from avoidant to anxious to secure.
Financial Literacy in Your 20s Starts With Decisions, Not Income
First of all, it is not about lack of income but rather lack of decision-making skills. Indeed, most people aged twenty believe that earning more will solve their problems with money. No doubt, you have made such remarks too. I’ll be more capable of managing my finances if I get more money. But, for now, I do not have enough to even talk about this.
It’s When You Start Owning Up to Your Finances
However, scientific evidence proves that your feelings of control, rather than income, determine your financial health. For example, individuals with internal locus of control, meaning that people believe in influencing the results, will be able to budget, save money, and cope with financial pressures.
One of the quotations from Jim Rohn that I like is that “Formal education will make you a living. Self-education will make you a fortune.” But here is the takeaway. The minute you assume the responsibility of your money management practices, whether you’re broke or not, that’s when you begin accumulating wealth.
List Three Financial Decisions That Build Financial Literacy in Your 20s
Here’s an action. Even if your income is low, you could set up a free budgeting app. Next, you could cancel one unnecessary subscription. Finally, you could transfer £5 to savings or $5, even if it feels small.
Actually Turn Towards It
People who believe that they can control their destiny, that they can change their reality, that they take control of their financial habits, will see change. In the same way, I want you to recognize that you won’t feel better about your financial situation because you avoid looking at your bank statement. Instead, you’ll only feel better about your financial situation when you actually turn towards it.
You Won’t Save What You Don’t See
Number two, you won’t save what you don’t see. This is a psychological principle. We spend what we mentally label as available. As a result, your mind will perceive that money in your account as spendable as soon as you receive it.
More Effective than Discipline Are Automation and Separation
We think, “Oh, I’ll be disciplined this month. I’ll spend less.” But no, if there’s no automation and separation of how that money is divided, you will break your discipline. In fact, mental accounting helps reduce friction between what you want and what you do.
Spend What Is Left After Saving
There’s an amazing quote I love. It says, “Do not save what is left after spending, but spend what is left after saving.” That’s from Warren Buffett, one of my favorite quotes. In other words, don’t save what is left after spending, but spend what is left after saving.
Your Brain Is Lazy but Programmable
To start, you want to create an automatic save and then spend what is left over. You don’t want to be in a position where you just have this amount in your current account and you’re thinking, “Okay, I’m going to try and save some of it this month.” Otherwise, at the end of the month, you’re looking at it and you’re back at zero. You got to remember this. Your brain is lazy but programmable.
Make Savings Invisible
Make savings invisible. First, open a second account today. Then automate 10%, 20%, whatever you can do of every paycheck, even if it’s $10, to go straight there and label it a freedom fund. Label it your freedom fund. Finally, give it a name, something exciting.
Buying Things Won’t Build Financial Literacy in Your 20s
Number three, spending money on items will not make you rich, but knowing about them could. While people think that spending money is better than learning about it, impulsive shopping releases a lot of dopamine, but financial literacy enables development of long-term advantages. In fact, it is found that those individuals who have better financial knowledge face reduced stress levels and save more than those who don’t.
The More You Know, The More Money You Make
https://www.investopedia.com/terms/c/compoundinterest.asp
As Warren Buffett once stated, “The more you learn, the more you earn.” Money grows when your brain grows first. So, talking about investing, spend 10 minutes today reading about a financial concept, such as compound interest, inflation, or investing. Then swap one scroll for one financial insight.
Investing in Financial Literacy in Your 20s Beats Any Other Asset
In the early stages of building wealth, investing in yourself and in gaining knowledge is much better for you than any other asset. I promise you that.
You Don’t Require Any Additional Things; You Require More Strategy.
Splashing money will not help one become rich. In fact, each time you purchase to make yourself feel good, you are sacrificing your peace in the future. You don’t need more stuff. You need more strategy. After all, the goal isn’t to look rich. The goal is to stop worrying about money.
The Golden Handcuffs
Don’t ignore the reality of trying to present your lifestyle in a certain way. I have also discovered that it is something called the golden handcuffs. As a result, many individuals find themselves so accustomed to their way of life that they cannot leave a job that they despise.
Am I Prepared to Live the Rest of My Life Doing Something That I Hate?
Thus, even though you despise your work, you cannot stop doing it as it is providing you with the lifestyle that you like. The thing you must ask yourself is, Do I really want to spend the rest of my life doing what I hate just so I can afford to buy stuff? Of course, it’s fine if you do.
Don’t Let Your Debt Get You Down
Step number four, debt isn’t bad, but ignorance is. Most 20-somethings are taught that all debt is bad. In reality, it’s not. What’s dangerous is not understanding how it works and what type of debt you’re getting into.
You Can’t Beat a System You Don’t Understand
We avoid debt education out of fear. Yet, avoidance is what leads to mistakes. Psychology shows that we react more strongly to losses than gains. As a result, we emotionally shut down around debt. Therefore, the takeaway is you can’t beat a system you don’t understand.
Learn Debt Basics for Financial Literacy in Your 20s
Here is the action point for you: APR, credit score, interest. Pick one debt, such as your student loan or credit card, and break down how it actually works. Then plan your strategy. Don’t try to do everything at once. Likewise, don’t just look at debt as this one big bubble. After all, student loans are different to credit card debt. So go and understand it deeply and see what support there is out there as well.
This Is Not Laziness; It Is Overwhelming
Five, you’re not lazy; you’re swamped. We beat ourselves up over being bad with money. However, it is not that you are being lazy; it is simply that you have too many money matters to worry about. In fact, it is scientifically established that decision fatigue leads to people avoiding some decisions and acting impulsively.
Simplify First Then Scale
PT Barnum famously said, “Money is a terrible master, but an excellent servant.” That is the point. So keep it simple before scaling. How would this be accomplished in reality? Select one financial goal for the next 30 days. Just one. And track only that. No rush to solve everything at one go. After all, you inherited stress, not strategy.
Financial Literacy in Your 20s Means Unlearning Inherited Money Beliefs
Number six, your money beliefs aren’t yours, they’re inherited. This is from a psych principle of cognitive scripts and money archetypes by Brad Klontz. What we don’t realize is we grow up absorbing money messages. For example, maybe in your house people always say money is hard to make. The wealthy are greedy, or else we never discuss money. As a result, such subconscious scripts control our behavior until we change them.
State Three Financial Attitudes That You Grew Up With
T. Harv Eker said your money blueprints are not set in stone. You can change them. So here is the conclusion. You cannot alter your destiny unless you question your programming. To begin, write three financial mindsets that existed while you were growing up. What were the things your parents said? And what about your family members? What was the rhetoric around money?
Money Is Fuel for Generosity
And ask yourself, do these still serve me? Then rewrite one. For instance, instead of saying money is selfish, write money is fuel for generosity. Notice the difference. You can change your relationship with money. Ultimately, you can stop chasing it out of fear and start building it from wisdom.
Generosity Produces Wealth Instead Of Ruining It
Number seven is that generosity brings money, and does not take it away. While we are stressed, we learn how to be economical, but studies have shown that being generous leads to happiness and a financial mindset. In fact, those who give, even a little bit, are happy and productive people.
A Lot of People Who Give a Little
People often think, what will my $5 do? What will my $10 do? However, I promise you it makes a difference because what we need is a lot of people who give a little. That great giving that happens connects us.
Money Just Makes You More of Who You Are
There is an old saying that I have heard many times before, which goes, “Money just makes you more of who you are.” Right? In other words, it only serves to magnify who you already were anyway.
It Will Only Make You More of Who You Are
A lot of us are scared to become wealthy because we’re scared it might change our hearts. However, I am here to assure you that it will only make you into what you already are. The greater your income and if you are a kind-hearted individual, the more generous you will become. On the other hand, if you are an envious and small-minded individual, you will simply become more of the same.
Give Something Small This Week
And so, don’t feel like it will change you. It doesn’t have to change you. So that’s the takeaway. And here’s the action I want to leave you with here. Give something small this week. £5, your time, a referral, or a skill. All of that is giving.
Money Is More Than Numbers
Watch how your energy towards money shifts when it serves others as well. Here’s my final thought. Money is not just numbers. Instead, it’s an emotion, energy, and identity.
You’re Early Enough to Build Financial Literacy in Your 20s With Wisdom
At 20, you’re not too young to build wealth. In fact, you’re early enough to build it with wisdom. Consider just one change among those currently taking place. And always keep in mind that those who earn the most are not necessarily the wealthiest. Rather, the wealthiest are the people who developed the best relationship with money.
