We have been working through 5 benchmarks to manage your finances in your 20s. So far, we have covered benchmark one through three. The first benchmark highlighted the amount of change you typically experience in your 20s, so ensuring that you live within your means by building and living by a Plan to Spend or budget so that you are building margin by means of an emergency fund.
The second benchmark looked at what you are saving for and how to use aspects you will be spending on anyway to expedite this process and rhythm of saving. Looking at your housing and transportation costs to save more enables you to put money away into a Roth IRA.
The third benchmark looked at how money tends to make you more of what you already are, so figuring out your specific why behind saving and spending intentionally. This benchmark ensures you are prioritizing giving, whether it comes naturally or not.
Now, for the most part, all of these benchmarks are focused on the defense, which Webster defines as THE ACT OR ACTION OF DEFENDING or THE CAPABILITY OF RESISTING ATTACK.
When looking at guarding what you have achieved thus far, a proper defense is critical. But I would be remiss not to factor in the great importance in offense, which Webster defines as THE ACT OF ATTACKING.
A great offense means focusing on income growth in your 20s. This isn’t just about having great money management skills, then progressively making more money in order to build margin between what you make and what you are spending.
Benchmark #4 is about being proactive to not just hold the line but to take new ground in expanding your income.
You may be someone who has always known what you’ve wanted to do for a career, or you may be someone who has really struggled to find your place. But I guarantee you have a skill that may or may not have been realized that you can add tremendous value in.
If you struggle to figure out what that is, I would use a simple method to discover this. Those following my content know that I love to use a tool of looking at three components to help you narrow your options.
These are Passion. Proficiency. Provision.
The first component is to look at what you would do whether someone paid you to do it or not. This would be something you have a natural attraction to. Something that you would be excited to do or even passionate about doing. The second component is to look at what you are naturally good at. What is something that you’ve been told over and over again that you are skilled at? What is it that comes easy, something you are proficient in and is not a grind per se for you to do? Finally, the last component is to look at what you would do that would be able to provide an income or provision for you and your family. Something that could be a tool for supplying not only your needs but also your wants.
Once you determine the ‘what’ behind what it is that you will do for a living, I think it’s essential to determine where you want to take it and how you want to have an impact with your vocation. This is what we will discuss in benchmark #5 after this.
So now that you’ve determined what vocation you want to pursue, it’s important to look at the trajectory for that field. What are the limitations of that field? What is the seasonality of the position within that field? What threats to that industry can you immediately identify? You may consider utilizing a SWOT analysis in order to find the Strengths, Weaknesses, Opportunities, and Threats of the field you want to pursue. No field is technically fully immune from disruption, technology upsets, or changing norms, but at least looking at these aspects will encourage you to step into the job, field, or industry better-equipped.
Your 20’s is a decade for learning.
Not that you stop learning thereafter, nor should you. You want to take the opportunity to learn, try, and either succeed or recalibrate. You only fail if you stop and give up. This means this is the time to try out business opportunities before you are more established and have more responsibilities around providing for yourself and your family.
Typically this is 2-3 years where you feel proficient in the role, and the challenge of it being new has faded. Therefore, you may consider transitioning jobs when you feel you have learned what you could from a certain role. This also allows you to try out different industries, gain certifications, train, and not be afraid of exploring.
This will ensure that you are maximizing your earning potential and making yourself more marketable, valuable, and personable because of the experiences you carry.
Now, once you land that position or start that business, be sure to increase your investment to account for the new income. Take advantage of ‘free money’ through company matches or at SEP or SOLO IRA through the business you start. But be sure to factor in investing once you land that role or have a growing business established.
This offense approach enables you to intentionally build margin through the ability of weeding out what you don’t want and allowing you to cultivate the life you do want. Not only are you looking at maximizing your learning and income, but you are also trying your hand at a side hustle, starting a business, or looking at investment opportunities otherwise. If successful, these will attribute to your ability for financial growth, increasing the margin between what you make and your living expenses and also giving you a larger margin for error in investing in areas that may not be successful.
CTA: My call to action is to really look at whether you have taken an offense approach to your personal finances, more specifically, your ability to take new ground through a means of growing your marketability and in turn your income.
