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5 Smart Money Moves to Make in Your 20s & 30s | Build Wealth Early | Future of Finance Ep. 25
20 Plays6 days ago
Feeling like you're behind with money in your 20s or 30s? You’re not alone—and you’re not failing. In this episode of The Future of Finance, Marissa Wood breaks down 5 easy, high-impact financial moves you can implement in the next 90 days to build wealth early and avoid common financial pitfalls. From understanding why budgets aren’t diets to leveraging compound interest and employer 401(k) matches, this episode is your go-to guide for getting on track without feeling overwhelmed.
✅ Key Takeaways
- Budgeting is lifelong, not temporary
- Starting early with investing unlocks the power of compounding
- Employer match is free money—take it
- Diversify beyond your 401(k)
- Life insurance is cheaper when you don’t need it (yet)
- Taking action matters more than perfection
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Transcript
Introduction to Future of Finance
00:00:09
Speaker
Welcome to the Future of Finance podcast, where we break down investment strategies to help you live a better financial future. I'm your host, Marissa Wood, financial advisor and one of the owners of Union Financial Services. And if you're in your 20s or 30s, this episode is really for you today. Now, if you're in your 20s and thirty s and feel like you're behind with money, you're probably not failing.
Five Money Moves for Financial Stability
00:00:35
Speaker
You're just not focused on the right money moves to be making. And today I'm going to break down five easy to implement moves that can help you get right back on track in the next 90 days.
00:00:48
Speaker
Now, before we dive into those tips, I'd encourage you to subscribe to this channel, whether you're watching on YouTube, Apple, Spotify. and if this is the type of content that you enjoy, like, comment, share it with friends or family so we can continue to put out content. It really helps us if you do so.
Social Media and Financial Perceptions
00:01:06
Speaker
All right, now, when it comes to saving and investing in your 20s and thirty s and planning for your money moves to make, a lot of us do feel that sense of being behind. And I think it has a lot to do with the culture we live in, that Instagram culture, we like to call it. Everyone seems to be doing better than us online.
00:01:28
Speaker
And that's probably not the case. You know, they might be showing off a lot. Are they saving and investing enough? Maybe not. But something I hear a lot when I speak to my millennial and Gen Z clients is that we have it so much harder today.
Millennials, Gen Z, and Financial Myths
00:01:45
Speaker
And we're at such a disadvantage compared to our parents or grandparents. And Why is that? You know, is it because of inflation? Is it because of a harder job market, a harder stock market, real estate market?
00:02:01
Speaker
Maybe a little bit from each of those possibly. But what I think it really boils down to is the difference in lifestyle that we live today versus lifestyles in the 90s or in the
Building a Financial Foundation
00:02:15
Speaker
80s.
00:02:15
Speaker
mean, let's really think about it in terms of expenses. Back in the 90s, they didn't have... Subscriptions for streaming services, cell phone payments, you know, a lot of online shopping every month.
00:02:32
Speaker
They might not have even had more than one vehicle. And they certainly didn't have that overconsumption that we have from the Instagram era before. and constantly shopping and buying things immediately. Oftentimes, there was only one working parent in the 90s. And so the other parent stayed home to raise the kids.
00:02:51
Speaker
They didn't have those daycare expenses. They didn't have the extra transportation expenses. And so to say that we have it a lot harder now, I think is incorrect.
00:03:03
Speaker
I think it's just that our lifestyles are different. And so we need we need to adjust to those. We need to make sure our savings... and our investing strategies are aligned with the way we're spending these days.
Budgeting and the 60-20-20 Rule
00:03:15
Speaker
Not saying it's bad, but it's just different. And so our first tip would be do not live beyond your means. It is so important that from an early age in your 20s and your 30s, in the very beginning of your working years, you set that foundation to live within your means.
00:03:35
Speaker
And by doing so, you of course have to create a budget. You need to know what you're spending truly on a monthly basis and if you're spending more than you should in certain categories. Now, one of the budgeting tools that we use is called the 60-20-20 budget. And that is basically saying 60% of your income should be spent on needs.
00:04:01
Speaker
And these are your basic living expenses, your mortgage, your rent, your utilities, your health insurance, the things that you really can't cut out. 20% should be saved and invested. And then the remaining 20% should be spent on the once category. These are things like travel, shopping, going out to eat, those one-off spending that you really don't need, but things that you want. Some of us think we need it, but we really don't. It's a want. And so, you know, I'd encourage you to lay out a budget and see what you truly are spending. And I'd like to remind everyone that A budget is not a diet. I don't want you to think about it as something that only people have to do when the times are tough and they need to cut things out.
00:04:49
Speaker
Like with a diet, how you need to shed some pounds, you need to cut calories, and it's usually for a finite time because you're trying to get to a goal weight. Well, a budget is not like that. And I think a lot of us have that misconception that we only need to budget when we're planning for something, when we're saving up to buy a house or when we're planning our wedding.
00:05:13
Speaker
a budget should be lifelong and it should be adjusted forever. Some of my wealthiest clients... millionaires use a monthly budget because really what budgeting is is, just taking control of your money so that you know where you're spending it and you have purpose and intent behind it.
Starting Investments Early
00:05:34
Speaker
It's really just having that knowledge. And so if you don't know where to start with creating a budget, I'd encourage you, send me an email to mgreen at union-financial.com and just put in the subject line budget and I'll send you for free our template that we use that's 60-20-20 and it's customizable so you can plug in all your data, but at least you'll have a starting point.
00:05:59
Speaker
And then once you do track your expenses for a couple months, feel free to email it back to me and we can dive into it together. And I can show you if there's some items on that budget that are a little out of the ordinary or where there could be room for improvement.
00:06:15
Speaker
It's a huge way to set yourself up for success in the future by starting that budgeting early. All right, now tip number two, the second money move that you should make in your 20s and 30s is probably the most obvious and one of the hardest to do, and that is just getting started.
00:06:34
Speaker
Starting to invest at the earliest possible age. And why is that so important? Because of compounding interest. Now, you might have heard of that term before, compounding interest, but not a lot of us truly know what it means. And we should because Albert Einstein says that compounding interest is the eighth wonder of the world. And so it must be pretty good if it's the eighth wonder.
00:06:59
Speaker
so I'm going to go through two examples, one being a visual example and one using real numbers, depending on what kind of learner you are, to go through what compounding interest truly is and the importance of it. Now, my first analogy is going to be ah for those visual learners out there. Picture two people on a snow hill.
00:07:22
Speaker
One person's at the very top of the hill and one person's midway up the hill. And they both make a small snowball to start. They take that snowball and they start rolling it down the side of the hill.
00:07:35
Speaker
It starts getting bigger and bigger as they roll it. Now, by the time both of those people get to the bottom of the hill, whose snowball is going to be larger? The one that started at the top of the mountain or the one that started midway up, the one that started at the top, they're going to have the bigger snowball. Why is that?
00:07:55
Speaker
Because of the compounding effect. It had more time to grow and accumulate more snow, so it got bigger and bigger. That is compounding interest in snow form. Now in dollar form, let's talk about this.
00:08:09
Speaker
Let's say we have two individuals. We have Mary, she's 30 years old, and we have Joe, he's 40 years old. They both can save $10,000 a year and they're investing it and it's growing at, we'll say an average rate of 8%.
00:08:26
Speaker
So Mary's investing $10,000 year. starting at age 30, and it's earning 8%. Joe's investing that same $10,000 a year at age 40, earning that same 8%.
00:08:39
Speaker
Now, by the time they're 65 years old, how much do you think they each have saved? Mary should have a little over $2 million dollars in her investment.
00:08:49
Speaker
Joe, on the other hand, he started 10 years later. He started when he was 40. Same investment account should be worth approximately $860,000.
00:09:00
Speaker
It's still an incredible amount. Not any shame to Joe. He did a great job. He did what he could. But by Mary starting at age 30, just 10 years earlier, she has more than double what Joe has in his investment account.
00:09:14
Speaker
$2 million. dollars Mary's in good shape. And she accomplished that just by starting earlier. Now imagine if she started at 25 or even 20, how large that number could be.
00:09:27
Speaker
That is the power of compounding interest. Everyone always says when they're in their 60s, if only I started sooner. It's because of compounding interest. And they realize that, but it's too late at that point.
00:09:40
Speaker
And so don't wait until it's too late. Start now, regardless of the amount. And I would really encourage everyone, start before you have kids, if possible. Or start before your kids are...
00:09:52
Speaker
In school age, when they're in all their activities and sports and the bills really start adding up and then it's college and everything else. If you can start when your kids are really young or even before you have them, that's when you're probably going to have the lowest expenses and it'll be the easiest to invest a couple hundred dollars or a couple thousand dollars a month.
00:10:15
Speaker
And then the beauty of that is if you start prior to having kids, by the time you're in your, you know, late 30s, early 40s, and your expenses are a little higher, you have your children, they're in those sports and activities, maybe you have to buy them a car or help them pay for schooling, and you're you're being stretched a little thinner, you might have to back down those investments at that point.
00:10:42
Speaker
But it's okay because you started earlier and your money is already growing and compounding for you. So it's not going to be detrimental backing off for a couple of years. What is detrimental is waiting until, oh, wait until my kids are out of the house to start saving.
00:11:00
Speaker
It's too late at that point. You need to be saving and investing and making money while you sleep. That is what Warren Buffett says. You must be making money while you sleep and you can only do that by investing. You actually get wealthy by investing. You don't get wealthy by saving.
Maximizing 401k and Diversifying Investments
00:11:16
Speaker
It's a good starting point. We always want to be saving, but you don't want to have just money sitting in the checking and savings account. Let's have it invested, yielding interest. If we can average... 6% to 10% a year, that's a great starting point.
00:11:32
Speaker
And then hopefully build upon that as your risk tolerance changes. So tip number two, getting started early, of course. Now, tip number three should be the easiest for you to implement within the next couple weeks.
00:11:49
Speaker
And that would be taking advantage of an employer match in your 401k plan. If you have a four ah one k with your employer, I'd encourage you to find out what that match is.
00:12:02
Speaker
For example, if the employer is matching you 4%, I'd really encourage you to contribute 4% to that plan. Reason being, if you're contributing 4% and you're getting that match, you're instantly doubling your money.
00:12:18
Speaker
without even considering any market gains. So not maximizing that match, you're really leaving money on the table. So if you're not sure what your match is, reach out to your ah HR department, find out, get a little bit more information. I'd be happy to review 401k options with you. That's a service I provide to almost all of my clients and make sure that you are truly maximizing that match. But on the same topic of that,
00:12:46
Speaker
Don't put all of your money into your 401k. It's great to get that match and to stay disciplined, get that tax deduction. But for example, if you can afford to save $1,000 a month, 600 of it is going into your four ah one k With that other 400, let's diversify. Let's put it into some other kinds of investments for you that aren't just for retirement.
00:13:12
Speaker
because we wanna have money for the short term, midterm, and then eventually retirement. If we have all of our assets in 401k, where are you gonna get the money from if you need a new roof or if your air conditioning unit goes or you wanna renovate that kitchen?
00:13:29
Speaker
We need to have some short-term liquid money as well, and that can be done with a brokerage account that we can help you set up. where you still have access prior to retirement, but it's earning way more than it could in a checking or savings account.
00:13:44
Speaker
And so let's diversify, let's put some money in four zero one k or IRA, let's put some maybe in a tax-free vehicle such as the Roth or cash value life insurance, municipal bonds, and then let's have some that's liquid, readily accessible, but earning. So that's really just a tip to diversify and that is something that we can absolutely help you with regardless of what your budget is every month and what you can afford, we can make sure we can spread those eggs out. That's a little phrase. we don't want to have all of our eggs in one basket.
Life Insurance Tips for Young Adults
00:14:18
Speaker
All right.
00:14:19
Speaker
Now, our last tip, and of course there could be so many more, but I want to make this simple enough that you can take these five tips and truly put a couple of them to action. And if we give you way too much information, I know what happens. It becomes overwhelming and you say, I'll get to it maybe next year. Let's take some action today. So our last money move for those that are in their 20s and 30s would be to buy life insurance before you think you need it. And that's the funny thing with insurance. You can buy as much of it as you want when you don't think you need it.
00:14:55
Speaker
But the minute you really want life insurance, when you have a terminal illness or some kind of diagnosis, guess what? You can't get it Same thing with homeowners insurance.
00:15:08
Speaker
If you think that you're going to put a huge homeowners policy in place while there's a hurricane currently swirling in the Gulf and ready to hit your area tomorrow, it's too late at that point. You have to do it before you think you'll need it. And so with life insurance, I always encourage anyone in their 20s and 30s, even if you don't have children yet, buy some life insurance while it is the most affordable it will ever be for you.
00:15:34
Speaker
The younger you are, the healthier you are, the more affordable life insurance will be. And so where do we start when we talk about how much life insurance I should buy? Well, a good starting point is usually your outstanding debts.
00:15:49
Speaker
So mortgage, student loans, car loans, taking those debts and adding it to five or 10 times your salary. That's a good starting point for life insurance.
00:16:01
Speaker
And of course, we can talk about what type of insurance, whether it's term or permanent, how many years you want coverage for. That's going to be a personal individual conversation.
00:16:12
Speaker
But getting that approval from a life insurance policy while you are young and healthy is going to be absolutely to your benefit for potentially your entire life. Get that policy in place so you have protection if and when you ever need it.
00:16:27
Speaker
And if you have a policy with your employer and you're thinking, as I just said, it should be your outstanding debts amount and five to ten times your salary, you might be doing the math in your head going, wait a minute, that's it' over a million dollars. I know I don't have over a million dollars in coverage with my employer. Yeah, you probably are underinsured.
00:16:49
Speaker
So many people are vastly underinsured. And honestly, insurance can be quite cheap at that age. So we can add plenty of insurance coverage for you for literally a couple hundred dollars a year.
00:17:04
Speaker
Absolutely worth it to have that conversation. and it'll give you that peace of mind too for you and your family. My whole point is you don't need to have everything figured out in your 20s and 30s. You just need to be intentional and take some action. Let's not be procrastinators this next year.
Immediate Action on Financial Tips
00:17:23
Speaker
Let's put a couple of these things in place so that we can build wealth early on.
00:17:29
Speaker
and set ourselves up with an amazing foundation. So I'd encourage all of you to pick one money move from today's episode and actually implement it this week. Not Sunday, not when life slows down, not after that vacation, this week.
00:17:46
Speaker
Pick one of them, whether it's emailing us about a budget, whether it's opening up that brokerage account, and we can help you with that, checking in to see what your 401k match is and maximizing it, finally opening that Roth, or exploring some life insurance and requesting a quote from us.
00:18:05
Speaker
You can do one of those things this week. I promise you it will not take long, and I will be there to guide you through it. All you have to do is go to our website, union-financial.com,
00:18:16
Speaker
Click schedule a meeting. You don't actually have to schedule a meeting with us. It can be a phone call, Zoom call, or it can be a quick meeting. And you can request to have your questions answered or an illustration or quote for your exact situation.
00:18:32
Speaker
Always complimentary. Our job is to provide you with some education so that you can get your future aligned.
Conclusion and Disclaimer
00:18:38
Speaker
So for everyone that was listening, thank you so much for tuning into another episode. If this was the type of content you enjoy, please like it, share it, comment, and give us some feedback so that we can continue to do so for you.
00:18:51
Speaker
And for everyone else watching, thank you for tuning in to another episode of the Future of Finance podcast. I'm your host, Marissa Wood. We look forward to helping you live a better financial future.
00:19:04
Speaker
investment advisory services offered through brookstone capital management lc a registered investment advisor bcm and union financial services are independent of each other insurance products and services are not offered through bcm but are offered and sold through individually licensed and appointed agents The opinions expressed by Marissa Wood and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involved risk and otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned and may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation. This program is designed to provide accurate and authoritative information nation with regard to subject covered. Indexed or fixed index annuities are not designed for short-term investments and may be subject to caps, restrictions, fees, and surrender charge as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the insurer. Please refer to our firm brochure, the ADV 2A, item 4, for additional information. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by Brookstone.