Your 20s and 30s are a period in your life when you should make smart financial moves and, perhaps more importantly, avoid making big mistakes.
This blog guides you through what you should be doing and what you should avoid on your wealth journey.
How Crucial is it to Build Wealth Rather than Enjoy Your Youth?
Young people face a catch-22 when it comes to building wealth.
They have time on their side, but they often lack the resources and experience to invest wisely. While it makes perfect mathematical sense to invest every penny early to maximise future returns, doing so might mean sacrificing meaningful life experiences along the way.
In my early 20s and late 20s, I sacrificed a lot of experiences to put more money into my investments – I had a vision of where I wanted to go, and I made sacrifices along the way in terms of my lifestyle. I would often have to say no to holidays, drinking, nights out, and so on. All the spare money I had was going into investments.
Would I do all of this again? Yes.
Is it the path for everyone? No.
Young people need to weigh up the costs and benefits of the experiences, and the future sacrifices they will have to make. The advantage of starting early is the power of time – your investments have time to compound and you will not have to invest as much later on if you start early.
What Financial Advice Would you Give your Younger Self?
My financial advice to my younger self is to spend time working on building skills that will result in a high income. Focus on building a versatile skillset that makes you valuable to others and adaptable over time. In the early stages of your career, prioritise growth, learning, and acquiring skills that position you as a resourceful and marketable professional. Incidentally, learning how to market yourself is useful no matter what you choose to study!
If I were redoing my life, I would have considered learning computer science and how to code so that I could create products and benefit from the SAAS (software as a service) boom. Software engineers could command high salaries, and there was always a shortage of engineers in the UK.
This career choice would have given me the skills to access a high-paying job market and allow me to create software solutions that could assist me in creating my business. I would also have been better equipped for the AI revolution. Building these high-income skills early would not necessarily have required a huge financial investment, but it would have taken time to master them.
Had I learned these skills and prioritised hiring developers, it would have significantly benefited our company. These skills would have also made it easy for us to pivot quickly if there were any opportunities in other related markets – there almost certainly were.
Is it a Smart Financial move to go to University?
Whether or not it is a smart financial move to go to university depends on what you expect to get out of university.
Dave Ramsey often uses humorous examples like “left-handed puppetry,” “underwater basket-weaving,” or “German polka history” to illustrate degrees he views as offering low returns on investment. His point isn’t to discourage exploring interests for fun but to challenge the practicality of spending significant time and money on degrees that may not lead to career opportunities or financial stability.
I do think there are some key components of a degree that offer a return on investment:
- Direct Career Pathway: A clear link between the degree and industries with high demand and competitive starting salaries. E.g. Medical Degree, Law, Engineering, Finance and Accounting
- Rigorous Academic Standards: Academically challenging degrees often demonstrate a candidate’s competence and ability to solve complex problems. E.g. Mathematics, Theoretical Physics, Economics, Philosophy, History
- Commitment and Dedication: Programmes requiring sustained effort over time show discipline and resilience—qualities valued by employers. E.g. Medical Degrees, Veterinary School
- Practical Application: Courses that include projects, research, or tasks simulating real-world scenarios help bridge academic theory and workplace needs. E.g. Industrial Design and Architecture
- Commercial Relevance: Degrees with a focus on market-driven skills or business elements prepare students to create value in their industries. E.g. Business Administration, Fashion Design, Advertising and Marketing
- Work Placement Opportunities: Programmes that integrate internships or placement years provide invaluable experience and industry connections.
- Transferable Skills: Degrees that develop versatile skills like critical thinking, communication, and teamwork ensure adaptability in evolving job markets. E.g. Medical Degrees, Mathematics, Finance
If your degree choice does not have these qualities, then you should take some time to decide whether taking a degree programme will help or hinder your financial journey.
Those who have undergone higher education earn more money on average than non-graduates. By age 29, HE (Higher Education) increases earnings by 25% for men and 50% for women compared to those with 5 GCSEs (A*–C). Further Education returns vary, with apprenticeships offering higher gains than classroom-based qualifications. After accounting for personal traits, Higher Education still adds 19% for men and 24% for women in earnings.
The simple lesson is that as long as you are engaging in improving your skills after schooling, then whether you take up a degree or apprenticeship, you will still earn more than someone who lacks education. However, if you can study and work at the same time, there appears to be a big payoff in terms of your long-term earnings.
Is University Debt a Problem?
University debt is a major consideration for students in the UK and the US.
A university degree can help someone learn lifelong and professional skills that can improve their chances of achieving financial success. However, it is a shocking hole in our education system which allows people to take on debt at such a young age without knowing the full facts and repercussions of their early decisions.
Although student debt is a form of investment, it is still debt. It is not free money without consequences and the debt pile can increase substantially as it compounds.
I feel incredibly fortunate—my parents generously covered my university fees, I saved diligently to fund my postgraduate degree, and a scholarship helped cover the remainder.
For those who are thinking about applying for a student loan, here’s what you need to know:
- Student Loan Interest Rates: Linked to RPI (Retail Price Index) inflation, which has risen recently, driving up interest rates on loans.
- Repayment Plans: Different plans (e.g., Plan 1, Plan 2, Plan 4, or Postgraduate Loans) have varying thresholds and terms.
- Inflation Impact: High inflation has pushed rates higher, but caps may apply to limit excessive increases.
- Scholarships and Grants: These don’t need repayment, so securing them can significantly reduce your financial burden.
Understanding your options can help you make informed decisions about funding your education. Make sure that you read the documentation on any loan that you take out.
Read up more on student loans here.
What Financial Skills do Young People need to Master?
The financial skills that young people need to master are budgeting and expense tracking, paying themselves first and investing.
These three skills are simple to understand and will put you ahead of the majority of others in your age group. I know this for a fact because in my life I knew so many people who earned more than me and yet could build any wealth. They would struggle with developing the discipline to budget and make short-term decisions.
Short-term decision-making can be very costly. I know a few people who have financial issues simply because they cannot delay gratification and rack up debt. A young person should aim to limit poor financial decisions rather than concentrate solely on building a high income.
These three skills are essential for financial success, and they come before everything else. A powerful habit to keep yourself motivated on your financial journey is tracking your wealth. Regularly monitoring your progress can be incredibly rewarding and inspiring. Watch as your debt decreases over time, celebrate milestones like paying off loans, and observe how your income streams and asset base evolve.
This practice not only provides a clear picture of your financial health but also helps you stay focused on your goals and adjust your strategies as needed.
Conclusion
Young people in their 20s and 30s should focus on expanding their skill sets, avoiding great financial loss, budgeting and tracking their journey, without forgetting to live. Nobody has the same path, but developing a basic financial skillset will pay dividends in the long run, as early compounding leads to massive growth.
