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Real Life On A Budget

25 Things You Need to Know About Money Before You Turn 25

As someone who recently entered her mid-twenties , I can promise we don’t believe we know everything. Most everything? Maybe. But not everything.

Honestly, a lot of younger 20-somethings I’ve spoken with the last few years still have a lot to learn when it comes to money.

Because of that, I thought I’d create a list of 25 things everyone needs to know about money before they turn 25.

Why before age 25? The point is that the earlier you learn this stuff, the more success you’ll have with money throughout your life.

1. Credit cards will make you broke. Two words: stay away! Related: Why I Hate Credit Cards

2. Car payments aren’t a way of life. You can pay for a nice used car with cash and avoid the average $500/month car payment.

3. Budgeting is your best friend. It’s simple: people who make a plan for their money end up winning with money. Related: Let’s Break Down a Monthly Budget!

4. The Joneses are broke. Don’t try and keep up with the Joneses. They might look nice, but they’re in debt up to their eyeballs and one emergency away from financial disaster.

5. It’s okay to say no. If a friend asks you to go on a trip or out to dinner, and you don’t have the money, there’s nothing wrong with saying no. Your friends will understand. And if they don’t, you should find new friends!

6. Your parents will eventually get old. That means you’ll need to have “the conversation” with them about wills and estates before it’s too late.

7. You can be a student without a loan. Part-time jobs, scholarships, grants, more affordable schools—there are many ways to pay for college without debt. Related: 5 Ways to Pay for College Without Loans

8. Retirement matters as much now as it does 30 years from now. Start saving for retirement as early as you can and put compound interest to work for you.

9. Wealth isn’t evil. A lot of people these days like to criticize rich people, but wealth isn’t evil. The Bible never condemns money, only the “love of money.”

10. Giving is one of the best things you can do with money. The more you have, the more you can give away to bless others.

11. The tortoise beats the hare every time. When it comes to money, patience will always pay off. Save and pay cash for stuff instead of using debt to “buy” them instantly.

12. Your first job might not be your dream job. See #11. Learn, get experience, and build your career. The corner office might not come right away.

13. Your first house might not be your dream house.  Remember, your parents took 20 years to get their house. Don’t expect that level of house right away. Related: Rent or Buy: Which is Best for You?

14. You should only get one type of mortgage: a 15-year, fixed-rate. Your monthly payment should be no more than 25% of your take-home pay. Stay away from 30-year mortgages and ARMs no matter what!

15. Marriage is much more difficult when you disagree with your spouse about money. Money fights are going to happen, but it’s extremely important that you agree on the basics of money—like budgeting, no debt, and saving.

16. Be happy with what you have. One word: contentment. Related: The Grass Isn’t Always Greener

17. You won’t get out of debt until you get mad. To get out of debt, you’ve got to get sick and tired of being in debt. If you sorta, kinda want to get out of debt, you’ll never make it.

18. Personal finance is 80% behavior and only 20% head knowledge. It’s all about behavior change. We all know if we’re being irresponsible with money. But, many times, we go ahead and make bad choices anyway. That’s got to change!

19. Get-rich-quick schemes are good for one thing: making sure you get broke quick. There’s no magic pill to get rich. It takes time and hard work.

20. Your parents weren’t perfect, but they probably knew more than you gave them credit for. The older you get, the smarter your parents get.

21. Never trust a payday lender. Never. Payday lenders are the worst. The worst! They’ll charge you 300% interest with a smile.

22. Don’t travel the world unless you can pay for it. And by “pay for it,” I mean don’t use credit!

23. It’s okay to have stuff. Just don’t let your stuff have you. Don’t mess up your priorities and let materialism get the best of you. Related: Don’t Make Money an Idol

24. Your parents’ house is not a bed and breakfast. Move out! By the time you’re 25, you should be long gone from your parents’ house and out on your own. Sure, you might have transitional periods where you stay for a few weeks, but don’t become a boomerang kid.

25. Eating out every night is a really quick way to go broke. You can $10 yourself to the poorhouse if you aren’t careful. The occasional night out is fine, but don’t make it a habit, especially if you’re already in debt.

What are some other things you should know by the time you turn 25?

This article originally appeared on daveramsey.com.

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  • Laura

    I would argue that this generation has been pursuing higher level education past a bachelor degree, as in my experience. I’m 26, graduating from physical therapy doctorate program from a public university. My mother has been so gracious to allow me to stay at home while attending school which has saved a boat load of money compared to my peers!!! Some people may not be fortunate to have this assistance but it definitely shouldn’t be overlooked. I plan to contribute to rent/bills when I have a flow of income while building a savings, car and living expense fund to be on my own soon.

  • Iryssa

    I would add one more thing: Money is always FINITE, so don’t waste your life believing that a small paycheque is the one and only reason for your financial troubles, or that you can suddenly go hog wild when you get a raise. Poor financial management can sink even the biggest ship.

  • Claire

    Education. Loans. Debt. The constant challenge of our generation. Is it possible for anyone to graduate debt free in this day and age? Absolutely!nnnIn August, I will be graduating DEBT FREE with my MBA (Masters in Business Administration). I have zero debt. Yes, you read that correctly. I owe NOTHING for all three of my degrees (Associates, Bachelors, & Masters) plus my car is paid off. Every time I have walked across the stage to receive a degree, it has been completely mine. I paid for every single penny of my Associates and Bachelors. I earned a graduate assistantship to help with the tuition of my Masters, while still working 2 other jobs to pay for fees, books, and other living expenses. nnnDebt free is possible and oh so worth it! nnnMy advice for graduating debt free:n- Don’t over look community college for your first two years (Associates Degree).n- Look for scholarships (I never received any scholarships or financial aid.)n- Consider a state school. (If you’re like me, you might find a hidden gem in your hometown!)n- If you attend graduate school, work to earn a GA (graduate assistantship) and work another job if possible.n- Loans? Just don’t. Run the other direction as fast as you possibly can! n- Work hard. Work so hard that everyone questions how you in 24 hours you can work an 8 hour shift, attend 2-3 classes, finish your homework, sleep, breathe, and still have energy. They’ll ask. I promise. As Dave Ramsey would say, “Normal is broke. Be weird!”n- Pray…A LOT. All the time. About everything!

  • jonny_utah

    You forgot the most important thing! Always bet on black when in Vegas. It is a proven way to stay out of financial troubles, just ask Wesley Snipes.