Rich Girl Roundup: The 10 Best Money Tips For Your 20s & Beyond

Henah: Every day I think of you saying “Your life is not a dress rehearsal.” 

Katie: Oh, hell yeah, baby. I love it when you quote me back to me. 

Henah: Okay. This is getting a little x-rated.

Katie: Welcome back, Rich Girls and Boys, to the Rich Girl Roundup weekly discussion of The Money with Katie Show. I'm your host, Katie Gatti Tassin. And every Monday, Henah and I are gonna break down an interesting money discussion. Here's a quick message from the sponsors of this segment. 

Before we get into it, this week's full episode on Wednesday, I am really looking forward to it. It's a bit of an investigation into the way roughly one-third of Americans live on an average wage of $10.22 an hour. So we'll be talking about the current state of low-wage work, why it primarily affects women, and some of the ways private organizations and certain cities are setting the example for how we right the ship and break these types of cycles. 

Okay, on to the Roundup. Henah, how you doing today? 

Henah: I'm good. It feels like spring. How are you feeling? 

Katie: It's snowing. 

Henah: Oh, never mind.

Katie: It was actually really nice earlier and now it's, yeah, this is just spring in Colorado.

Henah: Are you excited for your NorCal move where it's not gonna be snowing in May? 

Katie: Yeah, I'm a little nervous, though, that it's gonna be really hot all the time. I talked to somebody who was like, “Oh, you're moving to this particular area?” They were like, “Well, it's really hot and there are a lot of chain restaurants.” And I was like, “Well, I love Chili's 2 for $25, so I think I'm gonna fit in really well.” 

Henah: Where did Thomas make you go? 

Katie: Chili's. 

Henah: No, it was like Little Caesars. 

Katie: Oh, yeah. Well, in the video version of this episode—this is why you gotta watch on YouTube—we'll put a picture of Thomas and Little Caesars. It was his first trip to Little Caesars, and when we walked out he goes, “Wow, that young man really ran a tight ship. Refreshing. Really refreshing.” I was like, “You are 50 years old.” 

Henah: I love it. Okay, well, I can get into today's question if you want. 

Katie: Please do. 

Henah: And today's question is, “What is the best money advice for someone in their twenties, and what do you anticipate being the most impactful financial decisions in your thirties?” And unfortunately…

Katie: Well, you're already in your thirties, so you start. 

Henah: Yeah, I knew you were gonna out me, I knew it. I was gonna do it to myself. Yes, I am in my thirties officially, so I can kind of share maybe a couple of the things that I heard in my twenties, did not always take to heart. We're gonna start there. 

So the most obvious one I could think of is saving for retirement. And my parents told me from the first paycheck, like “Always save this amount.” And I wish I had listened, 'cause at the time I was like, “No. Why? This is new money. I'm rich.” And then when I started working here and I realized how much more you have to catch up the longer you wait, the more I was like, “Ohh, I wish I had listened.” What about you? 

Katie: I'm really happy you said that, 'cause now I don't have to. So when I was thinking about this question, I feel like I can sum up everything I feel about this, and money in your twenties, in something that's gonna sound a little bit paradoxical or like it's in contradiction with what you just said at first, but I promise it's not; it actually complements it really well, which is you don't need to be in a rush.

I think we graduate from college and it's like immediately there's this pressure to rent the dream apartment, get the dream job, marry the dream human. There's pressure to start making these types of things happen for yourself immediately. And I don't know, I think that sometimes that can put us in financial situations that we otherwise would not choose for ourselves. I don't think we have a full…there were things that I remember doing or considering doing in my early twenties that I did not grasp the financial implications of them at the time. 

Henah: Can you share an example, I guess? 

Katie: Yeah, sure.

Henah: She’s had so many.

Katie: Back in the day, before I knew about investing in general and investing for retirement, I mean, you learn from the people around you, right? And the other adults that I knew were just other adults that I worked with and they were all older than me and they all were homeowners, and we would sometimes talk about 401(k)s and stuff, but I didn't know anyone that was putting in more than like 4% or 5% into the 401(k). So immediately I'm kind of taking this signal from the people around me and being like, “Oh, I guess the next step is to buy a house.” So I started looking at houses in Dallas and I made $50,000 a year. I had like $8,000 in savings and I was like, “I think $250k seems like a good budget,” so like apropos of nothing. I just zeroed in, and surprise, surprise, this was 2018. But yeah, you couldn't get anything other than a dilapidated two-bedroom condo for $250k, $275k.

I started going down that path and I remember just calculating crudely how much I was gonna spend on rent over the next 10 years and being like, “Oh my god, I'm throwing so much money away; I need to buy this place.” And then what actually got me to cut it off was 'cause one time the realtor was like, “You know, you wanna go get a preapproval from a lender,” which, who was gonna preapprove me? And she starts going through all the closing costs and she's like, “Yeah, it's gonna be like another $25,000 at closing.”

And I remember being like white guy blinking meme, like “Wait, what? Closing…what's the closing cost?” And then I learned about property taxes, and I was like, “Oh, f that noise, this is not it.” 

But that push of like, “Okay, I'm an adult, I have a job, I need to buy a house,” that immediately just fell into my lap as this almost expectation. But I do think that there's that saying of “Don't rob yourself of the ability to actually be wealthy in the future by pretending to be that person now.” 

Henah: Oh, I love that. Yeah, I worked in nonprofits straight out of college. I was making a whopping $40,000, and I'm trying to keep up with the Joneses with friends who are making, you know, six figures out of college in investment banking. I wish I had sort of internalized the “Don't compare yourself; you're on different tracks” thing a lot easier, 'cause to your point, I feel like I can't go out for a night to a bar the same way that they could, or buying the same kinds of clothes or whatever. That was a big eye-opener for me, the later I got in my twenties, where I was like, “You are on a different trajectory, and that's fine and valid, too. You don't have to try to do everything now, because also you're robbing yourself of the future.” 

The other piece of this is like, I felt like I had spent all this money in my twenties trying to keep up, but then when I got to my thirties I was like, the things that I actually wanna do are not those things. The places I spent my money on…oops.

But I will say a couple other things for being in your twenties. Getting a good credit card and always paying off your balance in full was a huge, huge thing. That was the only rule my mom told me, was like, “I don't care whatever you do with your money, but always pay it off in full.” And I've seen how that has crept up on other people. So I would say that's a big one. Getting the best health insurance you can possibly get. I also was like, “I'm young, I don't have to worry.” And I still think that, and then look what happened recently, right? $20,000 in random bills that thankfully, we have insurance for, but life happens, and I feel like if you can, really try to get the best options.

And then the other thing like that my parents used to do and I used to roll my eyes, but now I definitely understand, is going line by line on your statements and coming to terms with one, your spending, and two, understanding if you're being charged anything wonky for medical bills or random utilities. I know you and I have talked about this a ton, but…

Katie: Well, it's just funny because I remember I would get my Discover card statements and every time I'd see the total balance due, I was like “Oh my god, someone has my credit card!” and then I would do… 

Henah: That someone is you! 

Katie: And I would look line by line and I'd be like, “Ope, no, I did buy that. Oh, crap, I bought that too.” I'm glad you said that, because I don't know why we as humans do this, but we have this weird assumption that we can just kinda eyeball it. You know, it's like “Oh, it's cool, I can intuit my spending,” but you really can't. It is one of those things that is so, so difficult to just mentally have a tab running in your head. You are almost always going to underestimate how much you're spending by like 20% or 30%, probably at a minimum. So I think that your point about making sure, both for fraud prevention, but also just so that you are aware of what is going out every month. Awareness goes such a long way, and you wouldn't think it does, but getting into that habit early… 

Henah: I know you love Copilot for that kind of thing, where you're like, okay, transparency of like, where is your money going? I mean last weekend, right? I went to a wine store and then I went to a bookstore, and then…I love shopping small, whatever, and I was feeling all good. I was like, “I didn't spend that much” and then I got home and I was like, “I spent how much?” So yeah, I think even in your thirties, even people who work with money, it's so easy for it to get away from you. 

Katie: She's stimulating the local economy. 

Henah: I'm investing in my community. I just had a couple other money tips for your twenties, which is, I know this is a privilege but if you can do it, my parents had told me this and I was like, “Yeah, no,” but stay at home as long as you can, if it's possible. Because you will set yourself up for so much future success money-wise, I mean, if you're saving the money you would've spent on rent. My brother ended up staying at home and I was like, “Yeah, no, I'm gonna move out.” And the difference in how much money we could save was incredible. 

Katie: Also just the family side of that, where I don't think I really consciously realized when I left for college, and then after I graduated from college, I did not move back home. I just went and you know, moved to a different city. I didn't realize at the time consciously that, “Oh, I'm never gonna live with my parents again.” The time that I have to spend with them is now limited to any time I can take time off and fly to go visit them. And I didn't, at the time, realize kind of how profoundly sad that is. Not to take it in a dark direction, but I think that there's a double benefit to living at home for a little bit in your twenties, is that you also just get to be with your parents more, assuming you have a good relationship with them, of course. 

Henah: Right. I read a tweet once, obviously I don't know the math exactly, but it was like “By the time you leave for college, you've spent 90% of the time you're gonna spend with your parents.” And I just was a sobbing mess.

Katie: Right? It's so sad. 

Henah: I think if you can and it's something you're willing to do, it can make a huge difference in your financial success. 

Katie: Can I throw a wrench in this? 

Henah: Well, I'm pretty sure I know what you're gonna say, but let's hear it. Let's hear it. 

Katie: Okay, I'm gonna throw…we're gonna do a hard pivot, because I do think that there is something here where so far, a lot of what we've said basically boils down to just like “Save,” which is definitely good advice all around. But have you ever heard of the different economic models of consumption and consumption theory? 

Henah: Yeah, I mean at a high level, but hit me with it. 

Katie: So it's basically, in the personal finance world, there's this idea that your save rate is static. From the time you begin working to the time you retire, you aim for a static save rate of 20% or 25%. But when economists approach these types of problems, they look at the way your life kind of unfolds. And so they look at these different periods of consumption, where typically in your twenties you don't have that much money to spend and you're trying to get your life started. So you are probably gonna have basically no save rate in this consumption model, and then I think your spending peaks in your forties and then begins declining again. So the whole thought is like, oh, you know you're gonna, by the time you're in your thirties and forties, you're gonna be in your peak earning years and it's gonna be way easier to save.

And so there's that famous story from Die with Zero, that book, I don't remember the author's name, but he talks about how he was making like $20,000 a year as some low-level analyst at some bank, and he was so proud that he was living so frugally that he was able to save a thousand dollars a year or something. And he told some senior banker and the guy was like, “You're an idiot. Why are you…you're working so hard to save a thousand dollars? There's no point to that. You're gonna make five times that amount in five years. Just spend the money now and save later.” And it sounds so counterintuitive to what we're used to, but it is interesting to consider the economic models of consumption when you have this type of conversation around how to treat money in your twenties.

There are two kind of valid sides of like, the more you save in your twenties the less you have to save later. But yeah, you're probably gonna work a lot harder to do it, because you're probably not earning as much as you're going to later. And then the opposite, which is like, well, your twenties are probably the time you're gonna have the most flexibility, freedom, and physical energy to go do things. So it makes sense to have a lot of experiences in your twenties even if it doesn't bode well for your save rate. So I don't know, just something. 

Henah: I love that, only because I also had one last bullet point which was, you can't take it with you. When I started making money, my favorite thing was being able to treat the people I loved and being generous with them and being like, “You got a promotion? I can send you flowers” or like “I'm gonna spend money on my parents and take them out to dinner.” Don't forget you’re living in your twenties,  too. Every day I think of you saying “Your life is not a dress rehearsal.” 

Katie: Oh, hell yeah, baby. 

Henah: I wanna get that tattooed on me. 

Katie: I love it when you quote me back to me. 

Henah: Okay, this is getting a little x-rated. No, I just, it's so true that we forward project a lot, but you also have to live in the moment, and unfortunately now that I'm in my thirties, I do have to think about some future things that make me approach money differently. And one of those things is figuring out how childcare is gonna work if that's in our long-term plan, and how that affects where you're gonna wanna buy a house and settle down, and I know we wanna aim to live by my parents so that there's access to free childcare, basically. It all starts forming, like coalescing into the long-term trajectory of your life, and it's much higher stakes. So I think when you're in your twenties and you can just kind of like have fun, obviously don't forget to do that. 

Katie: Yeah. Well, and the childcare infrastructure was my last…the lack thereof was my last thought on thinking about thirties. 'Cause that is typically when people start having kids, if they don't have them already. And it's funny, because sometimes when people come to me and they're like, “Yeah, I'm in my thirties, I wanna have kids, I haven't saved yet. And so I'm gonna have to pay for daycare and I'm not gonna be able to save.” I mean, that's kind of reality for a lot of people. So I think that one of the only ways to make it easy on yourself is if you save a lot of money in your twenties, because then, if you have to take five years from saving off to have a kid and put them in daycare, assuming you still have to work, and it's a trade-off that a lot of people have to make, you're not stressing out that like, “Oh my gosh…” 

It's almost, too, thinking about when you're in your twenties, you're probably not, if kids are something that are in the distant future for you, you're probably not thinking about the fact that, “Oh well, you know, I have this idea that I'm gonna save for retirement later, but I'm also gonna have kids later.” So it's like, well, how are you gonna do both? You may be able to do both if you make a lot of money, but I don't know, dude, that's the tough thing, is it is about balancing those priorities. But even if you are not someone that's able to get yourself to save for retirement when you're 25, you probably will feel a little bit more compelled to start putting money away in investments by telling yourself, “Look, I'm gonna have a kid in five to 10 years and that's really gonna make it a lot more challenging to be shoveling money away. So I'm gonna get ahead of that now.” 

Henah: And I will say, time flies, right? 'Cause when Jovanni and I, my husband and I, got together, we were like 23, and I was like, “I don't wanna think about having kids till I'm 30,” and then 30 came and I was like, “I don't wanna think about it until we're 33.” It happens very quickly. And then you'll kind of wish that you had maybe thought about it in advance a little bit. 

Katie: I definitely still feel like a child bride. So…it's like that's that Broad City scene where Alana's like, “I can't get married. I'm only 27. I'm not a child bride.” That's how I feel sometimes. I feel like I'm playing house.

Henah: Truly, I have close friends that got married at like 23 and I was like, I don't even know what I was doing when I was 23, so same. When I got married, I was like, “This still feels really young. I don't know what I'm doing.” Which is to say, a great note to end on, which is that all adults don't know what they're doing. And I wish that I had…

Katie: In conclusion…

Henah: …realized that earlier.

Katie: Nobody knows what's going on, and we're all doing the best we can. At the risk of being super cliché, I think it is about balance, which I feel like that's always what it comes down to, but in this case, especially. Anytime you feel like something is getting a little too extreme, that's probably a good sign that like, “Hmm, I might need to bring it back to a more moderate approach here.” Thanks for listening to this week's Rich Girl Roundup. We will see you on Wednesday.