87. Realistic Financial Milestones to Hit in Your 20s! (with ages)

[00:00] [Music]

[00:01] Don't Depend on Daddy is an unfiltered

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[00:06] their 20s and beyond. Whether it be

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[00:20] Hello and welcome back to Don't Depend

[00:24] on Daddy the podcast. My name is

[00:26] Michaela. I am your host. And today we

[00:29] are going to be talking about financial

[00:31] foundations and personal finance

[00:33] milestones to reach throughout your 20s.

[00:36] I'm super excited about it. I think this

[00:38] is going to be a really great just like

[00:40] reference point episode to come back to

[00:42] year overyear. And as we get to the end

[00:45] of the year, a lot of these episodes are

[00:46] going to be more like retrospective and

[00:49] reflective on how to manage your money

[00:51] at the end of the year going into a

[00:52] fresh year where we have a little bit of

[00:54] a fresh start. Before we get into this

[00:57] episode, I'm going to run through the

[00:59] housekeeping quickly. First things

[01:01] first, as always, you can get $10 off

[01:03] the personal finance dashboard when you

[01:05] use the code podcast 1. The Black Friday

[01:08] sale for the PFD has officially ended.

[01:11] But if you are new here and this is the

[01:12] first episode you're listening to, you

[01:14] can always use the code podcast 1 for

[01:16] $10 off the PFD. The PFD is my, you

[01:19] know, signature money management

[01:21] financial planning tool. It's a tool

[01:23] that I've used to save my first 100K and

[01:25] now I've grown my net worth to almost a

[01:27] million using this tool. So, it works

[01:30] and it just will help you feel more

[01:32] confident in your overall financial

[01:35] picture. So, you can get $10 off with

[01:37] the code podcast 1. I am going to be

[01:39] running another sale, not a Black Friday

[01:41] sale obviously, but um as we get to the

[01:43] end of the year and we're thinking about

[01:44] 2025 planning and everyone is sort of

[01:47] auditing and thinking about their

[01:48] financial goals, I'll be running another

[01:50] sale. So, if you want to wait and get

[01:52] $15 off instead of 10, feel free. But if

[01:54] you don't want to wait, use the code

[01:55] podcast one. The other quick thing for

[01:58] updates is own your career and own your

[02:01] money. Um, so if you are someone who is

[02:03] looking for a gift for either a recent

[02:06] grad or a young professional or someone

[02:08] in your life who is looking to overhaul

[02:10] their finances and take their

[02:12] professional power back, I highly

[02:14] recommend you check out Own Your Money

[02:16] and Own Your Career. Those are both of

[02:17] my books. They're available hard

[02:19] coverver. You can get them on Amazon or

[02:21] like Barnes & Noble, Books a Million.

[02:23] You can also get the ebook version if

[02:25] you have a Kindle or a Nook. I believe

[02:27] the Nook is the version of the Barnes &

[02:29] Noble Kindle. I use a Kindle. Or you can

[02:31] get the audio version, the audiobook

[02:33] version. So, also if you have Spotify

[02:36] premium, you can listen to Own Your

[02:37] Money for free with your Spotify premium

[02:40] membership. So, those books are really

[02:42] amazing gifts. If you are going to give

[02:44] someone a book, you might as well give

[02:46] them something that they can learn from.

[02:48] Um, I'm a little biased, but I think

[02:50] they're fantastic. So, those are the two

[02:52] quick housekeeping things that I'm

[02:54] running through. As a quick update, as

[02:56] you can see, if you're watching on

[02:58] YouTube, um, I'm still at my parents

[03:00] house on Cape Cod. I will be here

[03:01] through the end of the year. I

[03:02] apologize, the lighting is like a little

[03:04] bit funky. Um, the sun is like directly

[03:06] in my face, so I have the shade down.

[03:08] There's a little bit of a shadow. Sorry.

[03:10] Can't do anything about it. Um, but

[03:12] hopefully the, you know, talking in this

[03:15] video makes up for the strange lighting

[03:17] going on. Anyways, let's get into the

[03:20] juice here because I'm really excited

[03:22] about this episode in particular just

[03:26] because I think it's very tactical and

[03:28] it's really helpful. Something that I

[03:30] have found to be really challenging I

[03:32] think just in the era of being online is

[03:36] sharing any hard tangible milestones to

[03:40] reach at certain points throughout your

[03:42] 20s just because people are so sensitive

[03:45] about it. So before we get into these

[03:49] financial milestones that I personally,

[03:52] so this is my experience, my

[03:54] perspective, um you know, take that with

[03:57] a grain of salt that I think 20somes

[04:00] should aim for at different periods. I

[04:02] want to be super super super clear that

[04:06] this is a guideline. Okay. So, I am

[04:09] going to be sharing ages for the sake of

[04:11] keeping this sort of structure and just

[04:14] making it easier to set tactical goals

[04:16] again because I'm finding that that

[04:18] information is hard to find and I think

[04:21] it's helpful um to have these tactical

[04:23] goals to have the age ranges and to use

[04:26] that as a guideline or a guiding post. I

[04:30] think it's helpful, but they are not

[04:32] meant to be rigid and they are not meant

[04:34] to make you feel badly about yourself if

[04:36] you don't match up to them exactly. So,

[04:38] if hearing milestones and hearing ages

[04:41] is going to trigger you or make you feel

[04:45] upset, then I don't think this is a good

[04:48] episode for you to continue listening

[04:49] to. So, just keep that in mind. Um, and

[04:52] with that, for those of you who are

[04:55] interested in this, let's get into it,

[04:57] cuz I think this is I I think it's

[04:58] helpful. And I say all of that again to

[05:00] not be like, you know, I I just want to

[05:03] be very clear upfront. Um because I know

[05:05] there are people out there who hearing

[05:08] things like this can feel upsetting.

[05:10] Anyways, we're going to go through the

[05:12] five milestones and I have some notes up

[05:14] on my laptop that I'm going to be

[05:16] looking at and let's just get right into

[05:18] it. So milestone number one is saving up

[05:20] an emergency fund. And the ideal age

[05:23] range for doing this is ages like 22 to

[05:26] 24. So this is really like that first

[05:29] financial goal that you are focused on

[05:31] when you graduate college. This is in my

[05:34] opinion the most important financial

[05:36] priority even before like paying off

[05:38] credit card debt or anything of that

[05:40] sort. And the focus is in your early

[05:42] 20s. So by age 24 25ish your goal should

[05:47] be to have 3 to six months of living

[05:50] expenses saved in a high yield savings

[05:52] account. So I use Ally Bank as my high

[05:54] yield savings account of choice. This is

[05:56] not sponsored. I have just used Ally for

[05:58] years and years and years. And the

[06:00] reason why I like Ally is because they

[06:03] have savings buckets, which I think some

[06:06] other high yield savings accounts have

[06:07] savings buckets, but again, I've been

[06:09] using Ally, so like I'm not going to

[06:11] switch to a different account

[06:12] unnecessarily, but the savings buckets

[06:14] make it really easy for you to segment

[06:17] your various savings goals. So within my

[06:20] Ally savings account, I have an

[06:22] emergency fund and that has a little

[06:25] less than 6 months of my monthly

[06:28] expenses and I would say 6 months is a

[06:31] threshold to aim for if you feel

[06:35] uncertain in your job or you know you

[06:37] want to pursue entrepreneurship as your

[06:39] career path. If you feel comfortable and

[06:42] confident in your job, 3 months is a

[06:45] totally perfect goal. Um, I have six

[06:47] months just, you know, because I work

[06:49] for myself. So, if I, God forbid, you

[06:52] know, my business were to go down the

[06:54] drain or something were to happen or I

[06:56] got hurt or whatever and I couldn't

[06:58] work, I'd have money to sustain me to

[07:00] hopefully bridge that gap before either

[07:02] finding a job or getting back to work.

[07:04] So, 3 months is a really great target if

[07:07] you have a regular job. And then after 3

[07:09] months, you can start balancing either

[07:12] adding to your emergency fund with other

[07:15] goals or move on to something else. To

[07:18] figure out how much you need to save for

[07:20] your emergency fund, you need to

[07:22] identify your monthly spend. So, what

[07:23] are you spending on your essentials and

[07:25] your non-essentials on a monthly basis?

[07:28] So, think about like rent, utility,

[07:30] grocery, transportation, going out to

[07:32] eat, going to the gym, all those kinds

[07:35] of things. what's an estimate of what

[07:37] that monthly outflow is. If you use a

[07:39] tool like the personal finance dashboard

[07:41] to track your expenses, this is a really

[07:43] easy number to land on. If you don't

[07:45] have a tool and you're feeling a little

[07:47] bit lost, I recommend you get one. Um, I

[07:50] also do want to say, I didn't say this

[07:51] at the beginning, I do have a resource

[07:53] library on my website that has both free

[07:56] and paid resources, spreadsheets, and

[08:00] budgeting apps, money management tools,

[08:02] etc. of all varying degrees that I have

[08:04] tried and tested and approved. So, if

[08:07] you are looking for a tool, maybe you

[08:08] don't want to use a spreadsheet, you

[08:10] want to use something a little bit more

[08:11] auto automated or digitized or whatever

[08:13] that's connected to your accounts, go to

[08:16] the resources linked in the show notes

[08:17] here, and you can go through all the

[08:19] ones that I, you know, again, personally

[08:21] like. But to be able to find that

[08:23] target, you need to know your monthly

[08:24] outflow. And let's say you spend $5,000

[08:27] per month, then your baseline emergency

[08:30] fund should be $15,000. That number can

[08:33] feel really overwhelming and really

[08:34] cumbersome. I understand. Take it day by

[08:37] day, week by week, month by month. Um,

[08:40] again, the goal here is to have this

[08:41] done by like 25. So, it's not going to

[08:44] happen in the first 6 months. Hopefully,

[08:47] it does. For some people, it will

[08:48] depending on what you do for work and if

[08:50] you're able to live at home and what

[08:51] your situation looks like. But don't be

[08:54] discouraged if it takes you, you know, a

[08:56] couple of years to save up that amount

[08:57] of money. That's normal for it to take

[08:59] some time. Um, so aim to save $500

[09:02] first, then reach $1,000. I think $1,000

[09:05] should be that like bare minimum

[09:07] baseline. $1,000 isn't really enough to

[09:09] cover like big major emergencies or to

[09:12] bridge the gap if you were to lose your

[09:13] job or something, but it's a really

[09:15] great first target to reach. And then

[09:17] work your way up to that final goal. And

[09:20] make sure again you're putting this

[09:22] money in a high yield savings account. I

[09:24] just want you to think about your

[09:27] um emergency fund as like a financial

[09:30] fire extinguisher. Okay? So I know that

[09:32] this is not like a sexy financial goal.

[09:34] I know it probably is hard to think

[09:36] about prioritizing it when there are

[09:39] likely other things that you want to be

[09:41] doing, but think about it as the

[09:43] financial fire extinguisher that is

[09:46] going to help you put out a poor

[09:48] situation should you find yourself in

[09:51] one. Emergencies happen. Um, but it's

[09:53] really designed to help again bridge the

[09:55] gap if you lose your job or if you

[09:57] happen to get into like a car accident

[09:59] or your dog dies or your dog has to go

[10:01] to the vet or something like these are

[10:03] real emergencies that can be very, very,

[10:05] very expensive. And if you don't have

[10:07] the money set aside, it just puts you in

[10:09] a little bit more of a precarious

[10:11] position. So, this money that you put

[10:14] aside in your emergency fund is not for

[10:16] like a spontaneous weekend trip. It's

[10:19] not to buy yourself a new phone. it's

[10:21] for real emergencies. So again, keep

[10:24] that in mind. And if it helps to list

[10:26] out like what would constitute an

[10:28] emergency just as a reminder like I

[10:31] would go through that exercise because

[10:33] emergency is subjective. So it's going

[10:36] to feel a little bit different for

[10:37] everyone. So again, milestone number one

[10:40] is saving up that emergency fund and the

[10:41] goal is to do this by the time you turn

[10:43] 25. Milestone number two is to start

[10:47] thinking about your retirement savings.

[10:49] So retirement does feel like a lifetime

[10:52] away. I do also think a lot of younger

[10:54] people um and I hate to do like the Gen

[10:56] Z thing, but I do think a lot of Jenz

[10:59] feels like they're never going to

[11:00] retire. Retirement is impossible or

[11:02] they're going to die before they retire.

[11:03] The world is going to end before they

[11:05] retire. And I totally get that. But that

[11:08] also could not happen, right? like you

[11:10] could very much so reached age 65 and

[11:12] everything's perfectly fine and the

[11:14] world just keep going to the world will

[11:16] have kept spinning and you could have no

[11:18] money because you didn't think about

[11:20] retirement at all. Um so you know you

[11:22] want to think about that because your

[11:24] biggest wealthb buildinging asset is

[11:27] time. So the age range to start thinking

[11:30] about retirement again we're balancing

[11:32] some of these goals here would be 22 to

[11:35] 26 27ish. By 26, 27, you kind of want to

[11:39] have a good cadence with your retirement

[11:41] savings. Ideally, you would do that

[11:43] earlier, but by 27, you know, having a

[11:46] percentage of your money going towards

[11:48] your retirement, really being able to

[11:50] think about not necessarily maxing out

[11:52] your retirement accounts, but increasing

[11:54] your contributions year-over-year.

[11:55] That's a really great target. So, at 22,

[11:58] like when you're first starting a job

[12:00] or, you know, whatever age you start

[12:01] your job, maybe you went to grad school,

[12:03] so you're starting at 24 or 25. Again,

[12:05] totally fine. But at your first job, you

[12:08] want to be contributing, I would say 1

[12:10] to 2% from day one towards your

[12:14] retirement account, regardless of if

[12:15] your company matches. If your company

[12:18] matches, then you want to aim to at

[12:20] least get the full company match, no

[12:22] matter what. So, let's say that your

[12:24] company will match your retirement

[12:26] contributions up to 3%. Then you want to

[12:28] make sure you're contributing at least

[12:30] 3% towards your retirement the first day

[12:33] you start working. Whether you start

[12:34] working at 22, 23, 24, 25, 26 does not

[12:38] matter because that is free money in

[12:40] your pocket. If you can't do the full

[12:42] amount of the match, then you know 1 to

[12:44] 2% or half of the match good target. But

[12:48] if you can get there and it's not

[12:50] inhibiting your ability to eat, then I

[12:53] recommend you start with that free

[12:54] match. By age 26, if you started working

[12:58] at 22 and you see a little bit of like

[13:00] that linear job progression, which

[13:02] people see that 10% 11% is a great goal

[13:07] to get to. When I was in my corporate

[13:10] job, every year I would increase my 401k

[13:12] by 1%. It was a very, very minimal

[13:15] change in my take-home pay. I didn't

[13:16] even really feel it or notice it. But

[13:19] obviously long-term that small increase

[13:21] when it's in the market and it's moving

[13:24] over time can make a really big

[13:26] difference significantly more than just

[13:27] 1% of a difference. So really think

[13:30] about how you are going to be increasing

[13:32] your retirement contribution throughout

[13:34] your 20s and into your 30s. Obviously, a

[13:36] great goal as you get older and start

[13:39] earning more is to meet those annual

[13:42] maximums on your 401k or your IRA or

[13:46] both if you can afford to. But

[13:48] increasing it year-over-year 1% 2% 3% if

[13:52] you're feeling good is great. And really

[13:54] having these targets of like by age 26 I

[13:58] want to hit 10% or by age 28 I want to

[14:00] hit 10%. Again, these are, you know, put

[14:02] them in the context of your own

[14:04] situation, but having those targets is

[14:07] really, really helpful to just make

[14:09] those year-over-year adjustments.

[14:12] Moving into milestone number three, this

[14:15] is where you're thinking about your

[14:17] credit score and building your credit

[14:19] foundation. And this is something to

[14:21] start thinking about in like your

[14:23] mid20s, so like 25 to 27. Those few

[14:26] years after college is really focused on

[14:28] the basics and just getting things set

[14:29] up. obviously would love to have a

[14:31] credit card again in college right when

[14:33] you graduate college, but pick and

[14:35] choose your battles. So, if that feels

[14:37] overwhelming to you, then I wouldn't

[14:39] worry about your credit until maybe a

[14:41] little bit later because there are other

[14:42] ways that you can build credit without

[14:44] using credit cards. But the goal is to

[14:47] start thinking about your credit score

[14:50] because your credit score is like your

[14:52] adult GPA. So, the age range that I have

[14:55] tagged on here is 25 to 27 because

[14:57] again, early 20s, you're focused on

[14:59] building up that emergency fund and

[15:01] making sure you're hitting those very

[15:03] minimum retirement contributions so you

[15:05] can get your money working in the

[15:07] market. By your mid20s, hopefully you're

[15:09] feeling a little more grounded with

[15:10] those first two milestones and you can

[15:12] pivot to optimizing a little bit and

[15:14] that's where this credit conversation

[15:16] starts to come into play. It really does

[15:18] matter what your credit score is,

[15:20] especially if you want to get approved

[15:22] for an apartment on your own. Um, get

[15:24] approved for a mortgage if you ever want

[15:26] to buy a home. Get any type of loan like

[15:28] a car loan. Sometimes even job

[15:30] background checks will check it. If

[15:32] you're getting approved for apartment um

[15:34] for an apartment, they will check your

[15:36] credit. They will do a background check

[15:38] on you. So, those are really important

[15:40] things to keep in mind if you want to be

[15:42] like a functioning independent adult in

[15:45] society without needing to have a

[15:47] guarantor or a co-signer on things,

[15:49] which there's nothing wrong with those

[15:50] things, but not everybody has that. So,

[15:52] it's important to make sure you're

[15:54] taking these steps to mitigate any

[15:56] issues that could come up in the future.

[15:58] So, the goal is by 27 to have what's

[16:01] considered good credit. So, good credit

[16:03] would be a score of 700 or above. So,

[16:07] how can you do this? And there are three

[16:09] key strategies that you can implement.

[16:11] First would be ensuring from the get-go

[16:13] you are always paying your bills on time

[16:15] because paying your bills on time like

[16:17] utility bills and your rent and

[16:19] everything and making like student loan

[16:20] payments those all impact your credit

[16:23] score even if you're not using a credit

[16:25] card. Obviously if you have a credit

[16:27] card and you're putting money on it and

[16:28] you're paying that off on time every

[16:30] month that is going to help improve your

[16:32] credit score and show like a long credit

[16:34] history. But if you don't have a credit

[16:37] card, you can still build credit either

[16:39] through like showing proof of payment

[16:41] for your utility bills. You can open up

[16:43] a secured card to make those payments.

[16:46] There are tons of online resources where

[16:48] you know you can build your credit in a

[16:50] more secure way. But overarchingly, you

[16:54] want to make sure you're paying all of

[16:55] your bills on time so that nothing is

[16:57] going to collections because that again

[16:59] will impact your credit score if you put

[17:01] anything on your credit card. So now

[17:03] we're going to talk about like smart

[17:04] credit habits. If you're using a credit

[17:06] card and you're putting anything on that

[17:07] card, you want to make sure you're

[17:09] paying it off in full and you're never

[17:11] ever ever carrying a balance. And that

[17:14] is I think like the most important thing

[17:16] to think about when you are building

[17:19] credit or opening a credit card. Never

[17:21] use those buy now pay laters. Um I don't

[17:24] think you need to use a CLA or anything

[17:26] of that sort. If you don't have the

[17:28] money to buy something in full at that

[17:30] time, just don't buy it. save up for it

[17:32] and then put it on your card when you

[17:34] have the cash and then pay the card off

[17:35] right away. But paying your bills on

[17:37] time is obviously going to really help

[17:39] get that score up. The other two things

[17:41] are keeping your credit utilization

[17:43] under 30%. So this is the percentage of

[17:46] your credit line that you use and 30% is

[17:49] really the top of what you should be

[17:51] using on a month-to-month basis. So, you

[17:55] can check your credit line with your

[17:56] card issuer or with a tool like Credit

[17:58] Karma that will pull all of your

[18:00] different cards in. Credit Karma,

[18:02] Experian, both great resources. They'll

[18:05] pull all of your cards in. You can see

[18:06] your full credit line if you have more

[18:08] than one credit card. Um, but for

[18:10] example, let's say you have a credit

[18:12] line that's $5,000. 30% of that would be

[18:15] $1,500. So, on average, you wouldn't

[18:17] want to be putting more than $1,500 on

[18:19] your credit card per month. And then the

[18:22] last tip here is to make sure you're not

[18:24] opening too many lines of credit at once

[18:26] or getting too many hard inquiries at

[18:28] the same time. Each credit card that you

[18:30] open up is a hard inquiry on your credit

[18:32] and this can temporarily reduce your

[18:34] score. So if you are opening a lot of

[18:36] credit cards, you're getting a lot of

[18:38] inquiries on your credit report. That is

[18:41] going to like be a warning sign to

[18:44] issuers or um lenders that you know

[18:47] you're opening up a lot of cards. it

[18:48] could be a red flag that you need access

[18:50] to quick cash and you know then in the

[18:53] future that could impact your credit

[18:54] score may not be possible for you to get

[18:57] loans and all that kind of stuff. So be

[18:59] aware of that. Um you know one maybe two

[19:03] credit cards a year is like kind of the

[19:04] most. All that to say your credit is

[19:07] really important. The focus for your

[19:09] credit to really boost your score above

[19:11] 700 is in your mid20s. These are all

[19:14] things you can also be doing

[19:16] simultaneously just as like a cognizant

[19:20] person in your early 20s if you're just

[19:22] practicing good credit spending um

[19:23] credit card spending habits and you're

[19:25] paying your bills on time like you're

[19:26] building and boosting your credit before

[19:29] this mid20s point anyways. So by the

[19:31] time you reach 25 26 27 like your credit

[19:34] score is probably already going to be

[19:36] fine. Um, but if you're focused on other

[19:38] things in your early 20s, then this is

[19:39] something to pay attention to when you

[19:41] reach that mid20s point. Moving on to

[19:44] milestone number four. This is where

[19:46] things start to get a little less like

[19:48] foundational and a little bit more fun.

[19:50] These last two are more about investing

[19:53] and growing your wealth beyond just

[19:55] these basics like um beyond the basics

[19:58] of just retirement, 401k stuff, and then

[20:01] saving up an emergency fund. So

[20:03] milestone four is establishing more than

[20:07] one stream of income. And this is more

[20:09] of a later 20s milestone. So think like

[20:12] 27, 28, 29. At this point in your 20s,

[20:16] again, if everything was linear, which I

[20:18] know is not how everybody's life is. If

[20:21] everything was linear by that point in

[20:23] time, maybe you've been in your

[20:25] corporate job for a couple of years and

[20:27] you're feeling good about your

[20:28] retirement and you're approved for your

[20:30] apartment. Maybe you own a home, I don't

[20:32] know. Um, you could be thinking about

[20:34] getting married or maybe you're not

[20:36] getting married at all. I'm not at this

[20:37] point. So, you know, it just really

[20:39] depends on your life situation. But

[20:41] later on in your 20s, a lot of people

[20:43] tend to feel a little bit more

[20:45] established in their lives. And so, this

[20:47] is when you have the brain capacity and

[20:48] space to start thinking about more than

[20:50] one income stream. So, that could be a

[20:52] part-time job or a side hustle in

[20:54] addition to your corporate job. It could

[20:55] be thinking about entrepreneurship.

[20:57] Like, there's so many paths here. But

[20:59] diversifying your income makes it

[21:02] possible for you to not only continue to

[21:04] build just like general wealth and build

[21:07] up that financial foundation, but it can

[21:09] allow you to add more and more savings

[21:11] and investments to your broader

[21:13] portfolio and just expand your reach and

[21:15] expand the opportunities that become

[21:18] available to you. So having a day job is

[21:20] great, but I think we've seen too over

[21:23] the last year that the job market is

[21:24] fairly unsteady. And even jobs that have

[21:26] traditionally been considered not even

[21:29] recession proof, but just like reliable

[21:32] are no longer that. And people are

[21:33] getting laid off with no warning. They

[21:35] have no idea it's coming. I've seen lots

[21:37] of my friends get laid off. I've seen

[21:38] people in my family get laid off. I've

[21:40] seen emergencies happen. And so it's

[21:44] important I think to keep in mind that a

[21:47] job like a nineto-ive job that was

[21:49] traditionally considered reliable and

[21:52] like a real job is not that anymore

[21:55] unfortunately. So it's unfortunate that

[21:58] having an additional income is becoming

[22:01] a little bit more of a requirement as

[22:03] opposed to a choice. But rather than

[22:05] looking at it as a chore or something

[22:07] that you have to do, I think it's a

[22:09] really great thing to look at as an

[22:11] opportunity um because not only is

[22:14] additional income something that can

[22:15] help you build your financial foundation

[22:16] like I mentioned, but it's also an

[22:18] opportunity to learn and develop new

[22:20] skills and potentially explore an

[22:22] additional career path. And so I'll use

[22:23] myself as the example here, but Break

[22:25] Your Budget has totally changed my life.

[22:27] Not only in the sense of it's allowed me

[22:29] to grow my wealth and create the sense

[22:32] of control and freedom over my life, but

[22:34] I've learned actually so much from doing

[22:36] this. And if I were to return to a

[22:39] corporate setting, which my mind is

[22:40] open, I may do that. I hope to not, but

[22:42] it's something that who knows what my

[22:44] life holds for me, right? Like I don't

[22:46] know. If I were to return to a corporate

[22:48] setting, I would probably pursue a

[22:51] different type of job than what I did

[22:54] before I quit my job a couple of years

[22:56] ago, just because I've learned a totally

[22:58] new set of skills. And so, I've just

[23:02] discovered this part of me that I didn't

[23:04] know existed through my side hustle

[23:07] that's created extra income for me. It's

[23:08] allowed me to develop different skills.

[23:10] It's opened my eyes to different career

[23:12] paths, and I've just learned so much. So

[23:14] I would have never been able to reach

[23:16] that point if I never did this. So think

[23:19] of a side hustle as an opportunity for

[23:21] you to like lean into a passion or

[23:24] explore an area of interest. So for

[23:26] example, my side hustle that I'm, you

[23:28] know, planting seeds for, thinking about

[23:30] when I move to Chicago is to potentially

[23:33] get a job working at a coffee shop like

[23:35] as a barista because I really want to

[23:37] learn the coffee business because it's

[23:39] something that I potentially want to

[23:40] pursue in the future. But I've never

[23:42] worked a job like that. I don't know how

[23:43] coffee shops run. I don't know the back

[23:45] end. I don't know the business. I don't

[23:46] know the profits. Like, it's something

[23:48] that I need to learn about. And so,

[23:49] instead of looking at getting like a

[23:51] little part-time job as a chore or as

[23:54] something that's like annoying, I'm

[23:56] looking at it as this is a cool

[23:57] opportunity for me to learn something.

[23:59] And if it ends up being not what I want,

[24:02] like that's totally fine. There's no

[24:03] pressure there. And that's the beauty of

[24:05] additional income streams is they at the

[24:07] beginning at least are low stakes, low

[24:09] pressure. Um, so and usually when you

[24:12] put not a lot of pressure on it, that's

[24:14] when you're able to actually evaluate a

[24:18] opportunity or a situation for what it

[24:19] is as opposed to it being like this

[24:21] really stressful thing. So think about

[24:24] what a potential additional income

[24:26] stream could be for you. And a few

[24:29] examples would be like a freelancing job

[24:31] or a part-time job. I have a friend who

[24:33] she has a full-time job and she also

[24:35] works part-time at Free People as like a

[24:37] sales associate and she has a little

[24:38] community there and she's met tons of

[24:40] girls and she gets a discount on the

[24:42] clothes and it's a couple hours a week

[24:43] and it's totally great, right? Like I

[24:45] don't think there's any shame in that

[24:47] and I as much as I hate to see the

[24:51] corporate world be so greedy and like

[24:54] you know ruin people's lives honestly by

[24:56] laying them off in the middle of the

[24:57] night with no warning and no severance.

[25:00] What I am finding to be the silver

[25:02] lining about this is it's normalizing

[25:04] different job opportunities in different

[25:06] career paths where I think that's really

[25:08] valuable. I think it's so valuable to be

[25:11] able to pursue other things without

[25:13] judgment, without shame, just because

[25:14] you're interested in it. So, I don't

[25:17] know. I think there's a silver lining

[25:18] there. And I think changing the way that

[25:20] you view part-time work or side hustles

[25:23] or freelance work will do a lot of

[25:25] wonders for exploring those

[25:28] opportunities and finding new ideas. So

[25:32] to reiterate, the goal isn't just extra

[25:34] cash. It's building financial resilience

[25:36] and it's providing you the opportunity

[25:38] to explore some of your passions which

[25:40] again is so so valuable especially in

[25:43] your 20s. Moving on to the last

[25:45] milestone here, milestone number five.

[25:47] This is again later 20s, so like 27, 28,

[25:51] 29, and then getting into your 30s would

[25:53] be investing beyond retirement in making

[25:56] different investments that aren't just

[25:58] in a 401k or an IRA because I feel like

[26:02] at least in the personal finance online

[26:04] space, we see a lot of conversation

[26:07] around IRA and retirement accounts,

[26:09] which is very important. Um, but

[26:11] brokerage accounts and other types of

[26:13] investments totally get demonized

[26:15] because they're not tax advantaged. But

[26:17] when you have all of your money in tax

[26:20] advantaged accounts, you can't access

[26:22] those accounts without penalties or

[26:23] without fees until you retire. So there

[26:26] is a lot of value in having

[26:28] non-retirement investments for those

[26:30] either shorter or mid to longterm goals.

[26:33] I know that was like short, mid, and

[26:34] long goals, you know, but it's different

[26:37] different reasons why you would invest,

[26:40] I guess, beyond retirement. So, like for

[26:43] example, I have money in a brokerage

[26:44] account that I don't necessarily plan

[26:47] anytime soon to use. But if I were in

[26:51] the next couple of years to buy a home,

[26:53] I may draw down from those accounts

[26:55] depending on, you know, what my other

[26:57] accounts are looking like, my financial

[26:58] situation, what the market's looking

[27:00] like. But that's money that I can access

[27:03] for different purchases or different

[27:05] events in my life. Whereas, if that

[27:07] money was in a retirement account, I

[27:08] wouldn't be able to use it for a

[27:10] purchase of that sort. So graduating

[27:12] from retirement accounts to broader

[27:14] investments is something that I

[27:16] recommend you do when you're ready and

[27:19] like the element for being ready is

[27:21] you've got your retirement accounts on

[27:23] lock. You're able to actively contribute

[27:25] to those. You have an emergency fund,

[27:27] you're feeling comfortable at work. At

[27:29] that point, you don't have any debt or

[27:30] credit card debt. Student loan debt,

[27:32] that's a little bit different or like

[27:33] maybe a car loan or something, but you

[27:34] don't have any credit card debt or super

[27:36] high interest debt. At that point, it's

[27:39] a great time to start thinking about,

[27:40] okay, maybe I have some additional

[27:42] income or some discretionary income that

[27:44] I'd like to put towards different types

[27:47] of investments. This is where the

[27:49] brokerage account and non-retirement

[27:51] investing goals come into play. And the

[27:53] reason why I place these at your late

[27:55] 20s is because usually it takes you all

[27:57] of your 20s to, you know, pay off credit

[27:59] card debt if you had it, to start

[28:01] actively contributing to those

[28:02] retirement accounts, to get your

[28:04] spending underway, to start paying down

[28:06] student loans or a car loan or something

[28:08] and like really get your finances in

[28:10] order. I think a lot of people don't

[28:13] reach a point where they're comfortable

[28:14] to invest beyond that until they're 28,

[28:17] 29, and even into your 30s. Maybe you're

[28:20] not even there yet. And that's normal.

[28:22] And part of again why I wanted to add

[28:24] age ranges on here is because I think

[28:26] it's important to talk about how

[28:30] you can do things for your finances

[28:32] later in life. Like you don't have to do

[28:34] everything by the time you turn 25,

[28:36] which is not something that we see a lot

[28:39] on social media. And I mean I've

[28:41] definitely contributed to it because I

[28:43] use that hook of I saved 100K by the

[28:45] time I was 25. That's marketing. It's

[28:46] true, but it's marketing. And I think

[28:48] it's important to remember that that

[28:50] these big numbers are attention

[28:53] grabbers, okay? And it's not normal for

[28:56] everyone. And generally, myself

[28:57] included, which I've discussed, there

[28:59] are some extenduating circumstances to

[29:00] being able to reach those points. For

[29:02] me, I lived at home for kind of about a

[29:05] year during CO and that obviously made a

[29:07] big difference in my ability to save up.

[29:09] I did reach that milestone before um

[29:12] like before co like I moved and

[29:14] everything but you know there are again

[29:16] things that help bolster that number um

[29:19] for me and for pretty much everyone else

[29:21] who has said it because a lot of the

[29:22] people who do claim that like I have

[29:24] relationships with and I've spoken to

[29:25] and you know it's I my point is it's

[29:28] important to remember that when you see

[29:31] these big milestones there's always more

[29:33] to the story and they're outlier

[29:35] situations. So reaching the ability to

[29:38] invest beyond your retirement account at

[29:40] a later date is normal like it takes

[29:43] time. So the benefit of investing beyond

[29:47] retirement accounts is that you know you

[29:49] have some more accessible assets with

[29:51] fewer restrictions. So that goes back to

[29:53] that point about retirement accounts

[29:55] being tax advantaged. When they're tax

[29:58] advantaged there are restrictions around

[29:59] what you can access and when. Um, but it

[30:02] also allows you to diversify your wealth

[30:04] across different types of investments.

[30:06] So these different types of investments

[30:08] could be individual stocks, emerging

[30:10] markets, real estate if that's something

[30:12] that you're interested in. And they can

[30:14] help you achieve those medium to longer

[30:17] term goals. So like I mentioned earlier

[30:19] too, buying a home, maybe starting a

[30:21] business, funding any type of major life

[30:23] purchase. Again, that's going to vary

[30:25] person to person, timeline to timeline.

[30:27] Everything is going to look a little bit

[30:28] different for each individual person.

[30:31] And that's totally fine. But the primary

[30:33] goal of investing beyond retirement

[30:35] accounts is to create that broader

[30:37] financial portfolio that provides

[30:39] opportunities beyond just the

[30:41] traditional retirement planning that we

[30:43] are force-fed, which is super important

[30:46] but not the only thing to think about

[30:48] because you can only access funds in

[30:50] your retirement account at retirement

[30:52] age. And again, it demonizes brokerage

[30:54] accounts and other investment

[30:56] opportunities because those aren't tax

[30:59] advantage. So, I like to think of the

[31:00] difference between retirement accounts

[31:02] and like brokerage accounts as with

[31:04] retirement accounts, whether you're in a

[31:05] Roth or a traditional, you're either

[31:07] taxed on the way in and can withdraw

[31:09] tax-free on the way out, or you

[31:12] contribute taxree on the way in and then

[31:14] you pay taxes on the withdrawals on the

[31:16] way out. With brokerage accounts, you

[31:19] are contributing taxed income because

[31:22] it's income that you receive after you

[31:23] pay taxes on it. And then when you

[31:26] withdraw that money, you're also paying

[31:28] capital gains tax. So you're taxed on

[31:30] the way in technically and you're also

[31:31] taxed on the way out. So it's just

[31:33] important to remember that those are the

[31:35] key differences, but the benefit is the

[31:37] flexibility and the ability to access

[31:40] funds. And also there aren't limits on

[31:41] how much you can put into a brokerage

[31:43] account. So you know with retirement

[31:45] accounts, 401ks, you have contribution

[31:47] limits. And maybe you're having a really

[31:49] good year or you've had a really good

[31:50] couple of years and you've maxed those

[31:52] accounts out and you still have money to

[31:53] invest. like you want to get that money

[31:55] moving in the market depending on your

[31:57] goals. So there is definitely a place

[32:00] for brokerage investing and other types

[32:02] of investing in your financial strategy.

[32:05] It just doesn't have to be something

[32:06] that you prioritize in your early to

[32:08] mid20s. It could be something that you

[32:10] think about in your later 20s. And

[32:11] again, that's okay. You still have

[32:13] plenty of time at 28, 29, and 30 to put

[32:16] money into different types of accounts.

[32:18] So, the key with investing beyond

[32:21] retirement and but really investing at

[32:23] any point in time is just consistency.

[32:25] You want to be consistent. It's okay if

[32:26] it's only $50 or $20 or $100 or

[32:29] whatever. You want to build the habit of

[32:32] investing and making those investments.

[32:34] And you'll learn by doing and there are

[32:36] lots of resources online. I also have a

[32:38] free investing guide which I'll make

[32:39] sure is linked in the show notes. And I

[32:41] also talk about this a lot inside Own

[32:43] Your Money. There's a whole chapter on

[32:45] investing and scenarios and investment

[32:47] types and an investment glossery and

[32:49] like lots of information on this. So,

[32:51] leverage those resources and make

[32:53] empowered decisions. Um, because again,

[32:57] as you go throughout your 20s, the goal

[32:59] is for your wealth to grow long term.

[33:01] And you do that by diversifying your

[33:03] accounts, diversifying your positions,

[33:05] and really thinking strategically about

[33:07] what those goals are. Anyways, I hope

[33:10] this was helpful. I'll do a quick

[33:11] summary here. So milestone number one,

[33:13] saving up an emergency fund. The goal is

[33:15] to do this like 22 to 25ish. Milestone

[33:18] two would be thinking about retirement

[33:20] account. That's going to be the same

[33:22] early 20s age, like 22 20 to 25, 26. Um,

[33:26] moving on to milestone number three is

[33:28] building up your credit score and really

[33:30] hitting that good credit, which is a

[33:33] score of 700 and above. And that's

[33:34] something to focus on throughout your

[33:36] 20s. But, you know, 25 to 27 is a good

[33:40] target. by 27, you want to have good

[33:42] credit. By moving on, moving on to

[33:44] milestone number four. This is where

[33:46] you're thinking about diversifying your

[33:48] income and hopefully adding in an

[33:50] additional income stream. This is

[33:52] something to think about in your like

[33:54] mid to late 20s. So, 26, 27, 28, getting

[33:58] into your late 20s. And then my also

[34:00] number five is investing beyond

[34:01] retirement. Great place to do this or to

[34:03] start thinking about it is in your late

[34:05] 20s. But obviously for all of these, the

[34:07] earlier the better. Anyways, just keep

[34:10] in mind these milestones are not a

[34:13] strict checklist. They're guidelines and

[34:15] everyone's financial journey is going to

[34:17] look a little bit different. But the

[34:19] most important thing you can do is to

[34:20] just start now at whatever age you're at

[34:23] listening to this episode. So, I hope

[34:25] this was helpful. Um, if you have

[34:27] questions about anything, obviously, let

[34:29] me know. Remember, personal finance is

[34:31] very personal. Your path is unique. And

[34:35] yeah, I'll catch you next week in the

[34:37] next