The financial advice everyone in their 20’s needs to hear

Dollar bills in glass jar on wooden background. Saving money concept.

I recently listened to an interview between NBA star Chris Paul and Men’s Health Magazine. Paul discussed what he did with his first big paycheck from an agent and reflected on some of the worst purchases he’s ever made.

Towards the end, Paul starts talking about how he views money differently now that he is a little bit older.

Instead of chasing clothes and cars as he did in his younger years, Paul craves experiences. He wants memories that will last forever. And this got me thinking about what I had learned about money up to this point.

My perspective on finances has changed drastically since graduating from college. I had almost nothing in my bank account, a stockpile of loans to pay off, and few resources to help guide my direction.

Things are much different now.

At 24, I have a lot left to learn about finances. But one fundamental truth has stuck out to me more than anything else:

It’s not about how much money you make. It’s about what you do with your money to keep it that counts.

Discipline Is The Key.

Without discipline, your money will never last. A lot of people spend more than they have because it’s easy. The harder route is resisting temptation and making your money last.

For awhile I was operating on a single modest income stream while dealing with car insurance, student loans, and other necessary expenses. This period taught me to save whatever I could and keep a lean overhead. I didn’t splurge on luxurious items or take lavish vacations. I lived within my means and found a system that worked.

In less than two years I have built a substantial savings portfolio, operate on multiple income streams that are growing rapidly, and am starting to better identify poor spending habits that can be eliminated.

Without discipline, this never would have been possible.


Here’s What You Have To Do:

1. Establish A Foundation

Open a savings account, build credit, set a budget.

These are the “secret tips” that every article on finances will tell you. But before all of that, it is imperative that you understand your current financial situation. I never really knew how much I had (or didn’t have) until the summer after graduating from college. In retrospect, this was an incredibly foolish mindset that set me back substantially.

Your foundation begins with an internal audit on where your savings stand, how much money you owe, and an idea about monthly expenses. A lot of people have poor saving habits because they don’t even realize how much unnecessary spending takes place.


2. Set Financial Milestones

In your mid-20’s it’s not always easy to look ahead. A lot of us don’t want to think about kids or buying a home just yet because it feels so distant and mature. Once these events are set in motion, our time as an adult is legitimized.

Regardless, having both short-term and long-term goals for your finances is an incredibly important step in staying on track.

Since 2017, I had a set amount that I wanted to save before making a big investment in an apartment. It took nearly two years, but I am now able to pay my rent stress-free because of one simple mindset shift: every financial decision I made was working towards this goal. It’s a lot easier to save when you have a long-term strategy in mind.

3. Pay Yourself First

Instead of saving whatever money you have leftover after spending, work to rewire your brain and save before you spend. Pinpoint a realistic amount from each paycheck that you can allocate towards savings.

People who save first often have less money to spend and tend to use the remainder on things they need. Plus, you are building a cash buffer that will become necessary for future large purchases.

When it comes to money, it’s important to be proactive, not reactive.


4. Maintain Multiple Revenue Streams

I have often written about the necessity of building multiple revenue streams. They provide extra income, creative freedom, and a financial safety valve if anything ever happens with your job.

However, in more recent months it has become clear that you must build and maintain these side hustles to truly reap their benefits. The trick is to maximize your earning potential and then automate as much as possible.

Don’t just focus on your salary. Instead, learn how to combine active income streams with passive income streams- and then make them last.


Final Thoughts

Your 20’s are the most important time to build sound financial habits. These are the years leading up to major life decisions that will have financial ramifications, good or bad, for years to come.

Being disciplined and understanding where your earnings are going is a great start. Setting milestones and successfully maintaining multiple revenue streams is even better.

Trust me, a little bit of saving will go a long way. Just be patient and watch your money grow.

This article originally appeared on Medium.