Achieving Financial Literacy in Your Early 20's: The Basics

This post goes out to the many 20-somethings who’ve expressed dissatisfaction with their understanding of financial systems and money management. Although I’m no financial advisor, I feel competent enough in financial literacy to share steps with others who may feel just as overwhelmed as I did initially.

This is critical information, especially if you’re young and learning financial independence. It’s never too early to build a great credit score or to start investing. Most of us begin our professional careers in our early 20’s with no knowledge of planning for retirement.

You may regret the tattoo you got over spring break in Cancun, but I promise you won’t regret having a good credit score when navigating loan interest rates to purchase your first car.

Here are my tried and true beginner tips for delving into the seemingly intimidating world of personal finance.

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Phase I, Research

1. Read books (appropriate for newbies). There’s a lot of unfamiliar jargon to learn, so don’t bite off more than you can chew. You’re not trying to be a professional stockbroker. My recommendation would be The Index Card Book by Helaine Olen.

2. If you have access to online courses, spend a weekend grinding through one. The LinkedIn Learning course Financial Basics Everybody Should Know was immensely helpful for me. I’m sure there are great resources on Youtube as well.

3. Create a personal financial literacy dictionary. Have a journal, notebook, or Word document to write down what a mutual fund is, how to leverage life insurance, and cross-comparisons of a 401(k) to a 403(b). Check out mine here.

Phase II, Cementing the Knowledge

1. Go to your local bank branch and make friends. Establishing a relationship with a local banker can be really important. They understand the ins and outs of their institution’s loans, credit cards, CDs, etc.

2. Talk to friends, family, and mentors. Obviously, money talk can be taboo, but if you have people in your life that understand money and have your best interest at heart, don’t hesitate to ask for advice.

3. Ask yourself what you want and map out your financial goals. How much savings do you want? How risk-averse are you? Ask these types of hard-hitting questions and think about where you want to be in 5, 10, or 20 years.

Phase III, Baby Steps

1. Work on the basics by building a good credit score. This Forbes article breaks it down into six easy steps.

2. Use credit cards (responsibly). This goes back to building a good credit score, but also, credit cards have tons of incentives like cash back and rewards you can capitalize on.

3. After following these tips, dive in and really get your hands dirty. Once you map out your financial goals, begin to leverage a personal brokerage account. I started with Robinhood, an app with commission-free trades of stocks and exchange-traded funds.

I’m not a financial advisor, but these steps have worked for me so far, and I hope they can help others. Be your own best advocate! You deserve to feel empowerment and security through how you manage your finances.