Rachel Rabinovich, CFP®, looks back on this milestone year, and shares how financial planning can help any Grownup achieve their goals.
At Society of Grownups, we usually say that becoming a Grownup is more a state of mind, instead of an actual age.
And yet, there is something about turning 25 that seems consequential. At 25, you’re a few years out of college. You’re halfway through your 20s. You may have just gotten a graduate degree or now have a few years in the workforce on your resume.
And because you’re at this pivotal moment, it’s a great opportunity to assess where you are, and where you’re going. So we asked Rachel Rabinovich, CFP®, to reflect on what advice she would now give herself at 25. (Admittedly, her suggestions can be tailored to any age.)
“At 25, I just didn’t concern myself with money issues until I was forced to,” says Rabinovich. “I was newly married, living in a basement apartment, considering grad school because I hadn’t yet settled into a career path that was meaningful to me. I had heavy student loan debt already, but wasn’t really thinking through how I was going to pay for more school. I was just beginning to see some positive cash flow, but didn’t really know how to optimize it. And I had some minor credit card debt and a car loan in addition to my student loans. Our savings were negligible, and I certainly wasn’t thinking about saving for retirement.”
The 20-something takeaway? Take the long view, and think through the financial consequences of big purchases so you know what you’re getting into.
“I’d tell my 25-year-old self she doesn’t have to live this way,” says Rabinovich. “My goals—going back to school, traveling, getting better housing—were attainable once I articulated them. By that I mean actually writing them down, attaching a dollar amount to each, and creating a plan to achieve them.”
As these life goals start to come into focus, it’s time for action!
Good rules of thumb: Track your spending, and don’t spend money you don’t have. Be clear about your needs, wants, and goals, and design a budget that takes all three motivators into account.
Pay off your credit card balance every month. Save early and often for your goals (and especially for retirement).
If you’re going to make a big change, like grad school or a new job, take a good look at all it entails so you can be deliberate about the choice you ultimately make. For the new job, consider the role itself, salary, benefits, commute, company culture, and growth opportunities. Will the work align with your values? Will it give you the means to develop new skills?
Above all, remember your North Star. In other words, remember those values! It’s easy to get caught up in “I should do x, I should do y.” Don’t! By following your own values, you’ll come upon life’s major milestones at the times they feel right for you.
“I’d tell my 25-year-old self she won’t always live this way,” says Rabinovich. “She’ll go to grad school and will wisely choose the most cost-effective option. She’ll move intentionally toward a more fulfilling career. And she’ll have the courage to ask for help from an advisor to take a hard look at her financial life and what she wants to achieve…and she will attain it.”
“Every challenge and hardship is an opportunity to learn and grow,” says Rabinovich. “What I do for a living and how I approach my finances have been greatly influenced by my experiences along the way.”
Remember, 20somethings: It takes time to achieve these big goals. By creating an action plan now, you’ll be one step closer to having your money work toward the life you want to lead.
A lifelong traveler and bookworm, Sarah spends her days thinking of new ways to explore and tell stories.
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While Society of Grownups hopes the information is useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. If you need recommendations geared to your personal financial situation, schedule time with a financial planner professional.