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5 Twenty-Something Money Mindsets You Need to Ditch

Ghost these toxic money mentalities faster than that creep from Hinge.

In college, we’re taught about a plethora of subjects, from economics to calculus to world history to underwater basket weaving. As valuable as all of these topics are (when was the last time a day went by without using n=mc^2?), the syllabus failed to include a course on personal finance. So, many of us enter the real world with a salary and no knowledge of how to manage it. Enter: your flawed money mindset.

Even if you were lucky enough to take a personal finance class in school, you were probably taught how to balance a checkbook, which – no offense, Mom and Dad – is about as relevant as learning how to use a VCR. Our education did not equip us with the most basic of life skills, which becomes a problem when you start throwing your $35,000 post-grad salary towards UberEats and  SHEIN rather than a 401k.
Money Mindset - burning cash

These 5 Money Mindsets Are So Yesterday

We identified the top five twenty-something money mindsets that it’s time to leave in the past. It’s worth noting that we’re not financial advisors here at Adultescence – just some twenty-somethings who are trying to get one more post-grad to open a 401k.

1. “Credit is bad and I should avoid it at all costs.”

Many of us have a deep-rooted belief that credit is the devil… and it’s not our fault. It’s hard not to when you’re raised with the likes of Dave Ramsey (follow these financial creators instead). Exhibit B: who can forget when Rebecca Bloomwood went absolutely apeshit with her AmEx in Confessions of a Shopaholic? Another deeply engrained life lesson is that credit cards = brawls over scarves at sample sales.

Contrary to societal messaging, credit is not all bad. In fact, building credit is essential if you ever want to be approved for an auto loan or mortgage.

There are several different factors that go into your credit rating, but one of the biggest indicators is “length of credit.” Translation: you need to start building your credit history ASAP in order to qualify for financing (and low interest rates) down the road.

While it’s true that living above your means and ruthlessly maxing out credit cards is bad, responsibly using credit through a loan or credit card is good. This shows to lenders that you are reliable with credit and will score you lower rates on future loans. You don’t want to be ready to buy a house only to realize that you won’t get approved for a mortgage due to lack of credit. And with rising housing costs, you’re gonna need a fat mortgage.
Money Mindset - spending money

2. “I can save for retirement later in life.”

Technically, yes, you *can* save for retirement later in life. But starting late gives you a serious disadvantage to building wealth. Fidelity estimates that people should be saving and investing ten times their income before age 67… that’s a lot of dough.

Once you’ve squared away your emergency fund (which is typically three to six months of living expenses), retirement should be the first thing you start saving for after college. If all you can afford to save is 2% of your salary per month, so be it. Starting early provides more time for compound interest, which is the interest you earn on interest. It’s a snowball, and it won’t even ruin your suede shoes.

You have a couple of different options when it comes to saving for retirement. Start with your employer. There are many different types of employer-sponsored plans, but some of the most common vehicles are 401(k), 457, or 403(b) plans. Many companies even offer a match, which is essentially free money. For example, if they match your contributions up to 6% of your salary, you could be investing 12% per paycheck and only paying for half of that.

If your employer doesn’t have a sponsored retirement plan (or you work for yourself – we see you, boss), that isn’t a free pass. The next type of account you should consider opening is a Roth IRA or a Traditional IRA. The big difference between these two types of accounts is that Roth IRAs can be withdrawn from tax-free after age 59 ½, whereas future withdrawals from a Traditional IRA are taxed.

Yeah, it’s way less fun to save for than a Chanel bag. But we bet you’ll think it’s exciting when you’re spending your elderly years at country clubs and tipping the pool boy with hundreds.
Money Mindset - holding savings jar

3. “I’ll wait until I have a higher salary to start saving money.”

This is a common money mindset twenty-somethings tote around like a Marc Jacobs bag as they live paycheck to paycheck, allocating all their hard-earned dough exclusively to nightlife and takeout. While you can certainly spend a portion of your income on these things, it’s a bad idea to hold off on saving a dime until you earn more.

Saving is not a by-product of earning *a lot* of money. It’s much more emotional than that, and like any emotionally-driven behavior, it requires work to build your savings muscle. As we see with lifestyle inflation (more on this in the next section), people who are big spenders at $40,000 are also big spenders at $80,000. Doubling, tripling, or even quadrupling your salary won’t quiet the voice in your head daring you to buy that $60 candle.

Start building good money habits early, by saving even a small amount every month. Practicing the diligence of putting money away and delaying gratification is the first step to a healthy financial life. By the time you are making the big bucks, you’ll decide to save that $2,000 bonus check towards a house rather than blowing it at Target.
Money Mindset - making online purchase

4. “A higher salary means I can afford a better lifestyle.”

Ever wonder how professional athletes and celebrities go broke? We know how – lifestyle inflation. Lifestyle inflation is when you increase your standard of living as your salary goes up. That’s why you might find yourself with double your 22-year-old salary at 26, while still living paycheck to paycheck.

It’s true that you can improve some things about your life as your salary increases, but that doesn’t mean you should go out and join Equinox, start shopping at Whole Foods and get a Rent the Runway subscription every time you get a raise. Pick a few categories that are meaningful for you to spend money on, and live beneath your means in the other areas.

The most dangerous part of living your twenties without a grasp on your finances is waking up at 29 and realizing you spent all of your money on things that bring no long-term value to you. And if this is your story – it’s never too late to turn things around, but it starts with changing your money mindset. Earning more money does not mean “spend the difference.”
Money Mindset - counting cash

5. “I’m broke!”

Twenty-somethings love to walk around complaining about how poor they are… which may be kinda true. However, the danger comes when we rely too heavily on the guise of “being a broke post-grad” as an excuse to not get our financial stuff together. Describing yourself as a broke twenty-something can enable bad spending behaviors and help you justify blowing all of your money on a vacation because, “oh well, I’m broke anyways.”

This money mindset also perpetuates the identity of being someone without money. If you are constantly touting how broke you are, guess who’s gonna keep being broke?

And no, this article is not some extension of The Secret where we tell you that looking in the mirror and whispering “money will arrive in the mail” will magically make you rich. But if you continuously talk about how broke you are, you’re going to live that truth. And nobody wants to live that truth.
Money Mindset - empty wallet

Fix Your Money Mindset

Our financial beliefs begin forming from a young age. Early influences in our lives like our parents, guardians, and teachers instill in one money mindset or another. And they might not always be beneficial ones. You’re welcome for that therapy fodder.

That’s why it’s important to be aware of our own money mindsets. We get to decide which ones can sit with us, and which ones need to be canceled.

By Jess Lohr

Jess is a Cambridge-based, Syracuse-born twenty-something who loves coffee, dogs and stalking Zillow for her future home. Her favorite ways to kill time include strolling through Boston’s cobblestone streets, socializing over a glass of wine, and reading finance books (if only 22-year-old Jess were like this).

She has spent the past 4+ years working in Consumer Insights, and when she’s not working on her 9-5, you can find her pursuing her most recent side hustle as a dog sitter. Jess is co-founder of Adultescence, a podcast and lifestyle website with the mission of helping post-grads navigate adulthood.

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