Top 3 things to do in your 20s & 30s

In the greater Seattle area, tech jobs are in the Top 10 entry-level jobs with high earnings potential and a fast rising salary. So how do you maximize the cash flow early on for a head start?

1. Pay down student loans
2. Commit to saving and spending based on your values
3. Invest for long-term goals

First Stop:  Pay down student loans

Debt takes away from your ability to accumulate wealth. The PEW Research Center found college-educated millennials without student loans have seven times greater net worth.

Did that add to your stress level?  I hope not.  This is just a reminder that paying off an amount you borrowed in the past + interest takes away from building your current wealth.

The next step is to bulldoze over debt and stop building someone else’s wealth.

Next Stop:  Commit to the process of saving

I know you’ve heard it all before, but pay yourself first. Saving money may not feel natural at first, but like any good habit, time and consistency are key.

Is this easier said than done? Maybe. Many millennials believes it’s difficult for their generation to live within their means and not overspend.

Keep the long-term strategy in sight: we all fall off the wagon, but staying the course over time will make all the difference.

Don’t forget:  Investing for financial freedom

Millennials have it tough.  Through two dot.com busts making it hard to get jobs, stuck in jobs you dislike, and taking on money stress early on.  It isn’t easy.

If the economy is so volatile, why even invest?  The recency effect makes you remember how hard the last 5 years have been, but clouds the growth seen over your youth.

Remember when gas was less than a dollar?  Investing in a diversified portfolio keeps up with inflation.  Investing means passively participating in business growth around the world. By investing in the total market, you focus on protecting yourself from minimizing future risks.  Rising prices, fluctuations in different sectors of the market, and takes a global approach instead of a local approach.

As a starting point, invest for diversification. Diversification means looking at more than just the U.S. market. Home bias occurs often – don’t fall into the trap! We see it in our 401(k) options that may offer one international market mutual fund while offering 10 U.S. large company skewed funds.

Stay invested and focus on long-term growth rather than short-term “wins” at a higher cost as an active player in the market. When you’re learning to cook, the best recipes tend to be the simplest ones.  Fewer ingredients, minimal kitchenware needs and simple instructions. Investing is a similar experience.

Extra Fun

Here are some great resources for starting down your path of growing your wealth:

• Podcast: You Need a Budget (YNAB)
• Podcast:  Planet Money
• The New York Times: Sketch Guy
• I will teach you to be rich

Do you have other helpful tips?  Share your thoughts in the comments below.

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The above discussion is for informational purposes only. Recommendations are of a general nature, not based on knowledge of any individual’s specific needs or circumstances, and there is no intent to provide individual investment advisory, supervisory or management services.

If you live in a state with it’s own form of state AMT, this further complicates the matter. AMT calculations can be difficult and you may need professional help, such as that of an accountant, tax attorney, or someone experienced in complex tax returns.