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How to be financially succesful before 30? What skills to develop?

RoyBatty123
New Visitor

How to be financially succesful before 30? What skills to develop?

I'm a 26 year old man. In my teenage and young adulthood years I had a very sober mindset about money (I live in a European country) and little interest in personal finance. However, when we face situations that are new, we discover things about ourselves that we did not know. Now I am 26 years old, I work as an engineer in a pharmaceutical company, and this has made me think that maybe I am more ambitious and competitive than I thought.

 

However, despite having a highly qualified job, I live with a flatmate, I have some financial freedom to travel a bit and go out for drinks or a restaurant, but at the end of the month I don't save more than a few hundred euros (if I'm lucky). How am I going to buy a flat without getting into debt for life?

 

This is probably not your typical FICO post, just wanted to share my story and see if I can get some insights. I work every day to improve my technical and social skills, both at work and in the new circles I make. For now, I try to strengthen my job security, and acquire all the resources that can allow me to start trying to climb positions shortly. I don't consider it a waste of time to enjoy what makes you happy one day (going to the forest, for example), but I do feel sometimes that my energy is dispersed, or I don't channel it in the most effective way possible.

 

I would love to know, for example, what qualities/skills do people who are financially successful have? What points to work on? How to make social relations with circles of power?

Message 1 of 9
8 REPLIES 8
NYJfan
Established Member

Re: How to be financially succesful before 30? What skills to develop?

Financially successful people LBYM -- Live Below Your Means.  Seems like you are doing that already.  In your situation, someone young with presumably no debt, and a good job, I would strive to save a significant portion of your income -- 40% to 50% -- and invest it as tax favorably as you can in your country.  The money you save when your young will have the longest time to compound and can be worth many multiples of the initial value by the time you're in your 60s.

 

Don't get caught up in buying a nice car, buying designer clothes, buying a nice flat in a hot neighborhood.  All of those things are liabilities.

 

And of course, do whatever you can to increase your income.  Obviously, the more you make the more you can save and spend.

 

Be careful who you marry.  You want someone who is aligned with your goals.

Message 2 of 9
SouthJamaica
Mega Contributor

Re: How to be financially succesful before 30? What skills to develop?


@RoyBatty123 wrote:

I'm a 26 year old man. In my teenage and young adulthood years I had a very sober mindset about money (I live in a European country) and little interest in personal finance. However, when we face situations that are new, we discover things about ourselves that we did not know. Now I am 26 years old, I work as an engineer in a pharmaceutical company, and this has made me think that maybe I am more ambitious and competitive than I thought.

 

However, despite having a highly qualified job, I live with a flatmate, I have some financial freedom to travel a bit and go out for drinks or a restaurant, but at the end of the month I don't save more than a few hundred euros (if I'm lucky). How am I going to buy a flat without getting into debt for life?

 

This is probably not your typical FICO post, just wanted to share my story and see if I can get some insights. I work every day to improve my technical and social skills, both at work and in the new circles I make. For now, I try to strengthen my job security, and acquire all the resources that can allow me to start trying to climb positions shortly. I don't consider it a waste of time to enjoy what makes you happy one day (going to the forest, for example), but I do feel sometimes that my energy is dispersed, or I don't channel it in the most effective way possible.

 

I would love to know, for example, what qualities/skills do people who are financially successful have? What points to work on? How to make social relations with circles of power?


(Mod cut - not here, please @SouthJamaica -- this comment is unnecessary and irrelevant, preaching + non-FSR)  While it's nice to be financially successful, it's far more important to be successful as a good human being.

 

On the subject of financial success, I would just quote Socrates:  "He is richest who is content with the least, for content is the wealth of nature."

 

You are 26 years old. You only have one life. Don't waste any part of it pursuing meaningless things.


Total revolving limits 699000 (597000 reporting) FICO 8: EQ 732 TU 721 EX 698

Message 3 of 9
tcbofade
Super Contributor

Re: How to be financially succesful before 30? What skills to develop?

Rule of thumb for young adults.

 

Open a savings account.

 

Every payday, ten percent of your net income goes into that savings account.

 

It is an emergency fund.  You do not touch it unless you have an emergency.

 

You can also use it to save for a home.  (...or a flat...)  Perhaps save 20% per payday?

 

You are young enough that it is up to YOU.  Set a goal.  Write it down.  Plan the work.  Work the plan.

 

Good luck!



08/01/22 Fico 8: EX 752, EQ 767, TU 763.
08/03/22 Fico 9: EX 744, EQ 755, TU No idea.

Zero percent financing is where the devil lives...
Message 4 of 9
Citylights18
Valued Contributor

Re: How to be financially succesful before 30? What skills to develop?

I don't know how taxation works in your country but at least in America there are several ways to reduce your tax liability. Understanding these programs early instead of waiting until your 30s or beyond will give you an edge.

 

1) Tax deferred savings accounts.

2) Tax deferrred medical/flex accounts.

3) Tax deduction from real estate.

 

They put these rules in where you can only deduct up to $10,000 state and local taxes (including poperty) and $750,000 for house mortgages. One percent property tax on a $750,000 home is then $7500 alone which is most of the 10k state and local limit. It make sense if you do want to get something to go small if possible. That way its also easier to rent out if need be.

 

Cash flow is really important. Try to cut all services you don't need. Online shopping whenever you can to earn cash back. Online shop for cars to negotiate the best price. I used to find the best price nationally on a vehicle and ask if a dealer can match.

 

Learn to follow the market and understanding the trends. Understand how to read a stock chart and what a moving average is. The more of this you can learn now the better you'll be off in the future. I have a co-worker that bought Etherum for the first time at the top of the market. I told him it was going to be a rocky year with the interest rate hikes but he did it anyways because it was a long term play. Wait until the market has a clear bottom then dollar cost average into something.

 

Just keep good habits when you go to purchase anything. Always try and get the best deal possible.

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Message 5 of 9
iced
Valued Contributor

Re: How to be financially succesful before 30? What skills to develop?


@RoyBatty123 wrote:

I'm a 26 year old man. In my teenage and young adulthood years I had a very sober mindset about money (I live in a European country) and little interest in personal finance. However, when we face situations that are new, we discover things about ourselves that we did not know. Now I am 26 years old, I work as an engineer in a pharmaceutical company, and this has made me think that maybe I am more ambitious and competitive than I thought.

 

However, despite having a highly qualified job, I live with a flatmate, I have some financial freedom to travel a bit and go out for drinks or a restaurant, but at the end of the month I don't save more than a few hundred euros (if I'm lucky). How am I going to buy a flat without getting into debt for life?

 

This is probably not your typical FICO post, just wanted to share my story and see if I can get some insights. I work every day to improve my technical and social skills, both at work and in the new circles I make. For now, I try to strengthen my job security, and acquire all the resources that can allow me to start trying to climb positions shortly. I don't consider it a waste of time to enjoy what makes you happy one day (going to the forest, for example), but I do feel sometimes that my energy is dispersed, or I don't channel it in the most effective way possible.

 

I would love to know, for example, what qualities/skills do people who are financially successful have? What points to work on? How to make social relations with circles of power?


There's 10,000 qualities that people will attribute to wealthy people, but 9,995 of them can eventually be boiled down to one over-arching quality: the capacity for delayed gratification.

 

LIving below one's means is all about not keeping up with the Jones', not treating yourself to that new car or electronic device, and not rushing out to do something as soon as you are able to -- delayed gratification. Saving and investing is putting your money to work today so you can enjoy something in 20 (or in your case, 40) years -- delayed gratification.

 

Among those remaining qualities besides delayed gratification, the big ones:

 - Looking at the TCO of items rather than their price. On a simple level, it means understanding that a $200 pair of dress shoes can last 10+ years if properly cared for whereas $50 dress shoes last only 1-2 years (aka the "boots theory", described here: https://en.wikipedia.org/wiki/Boots_theory). Combine this with delayed gratification and even those of modest means can escape the vicious cycle by carefully weighing and scheduling significant purchases. In a nutshell, the wealthy don't look at financial decisions with the mindset of "what will this cost me each month?" but rather "what will this cost me for the life of this good or service?"

 

- Take emotion out of financial decisions. Stock market down? Don't panic and sell everything. Stock market up? Don't get too cocky and buy overpriced equities. Don't give loans to friends and family (assume it's a gift or don't do it at all). Never co-sign for friends and family. Big windfall? Don't get excited and go on a spree. Never buy/sell something out of guilt, sympathy, anger, or any other emotion.

 

There's a theme from a book called the Happiness Project that is along the lines of don't go looking for love; instead, love yourself and love will find you. Same goes for social relations in the financial circles: focus on your own financial success, and other like-minded people will find you in the natural course.

Message 6 of 9
Citylights18
Valued Contributor

Re: How to be financially succesful before 30? What skills to develop?

I guess when it comes to delayed gratification before I bought my first property I rented a room from a private house for $450 a month on a monthly basis so I didn't have to break out of lease when I bought. An approach like this can work up to a certain level and it might make sense doing something like this for an extra year or two before buying.

 

This is my opinion owning a place and having a car affords creates more of a lifesytle than just spending your entire life in an walkable efficiency apartment. This also extends to other things like buying a boat, having a dog and traveling.  How long do you want to delay all of that? Personally I don't have some of those expenses and rather not but I can see why people do because they believe it enhances their lifestyle.

Official travel point totals as of 7/10/22 (805,499 Total Points)
Chase Ultimate Rewards 386,987 | AMEX Membership Rewards 102,648 | World of Hyatt 92,675 | Marriott Bonvoy 84,039 | Citi Thank You 83,056 | AA Advantage 15,244 | United MileagePlus 13,316 | British Airways Avios 11,333 | Jet Blue TrueBlue 8,277 | Hilton Honors 2,267 | Southwest Rapid Rewards 2,178 | NASA Platinum Rewards 1883 | Navy Federal Rewards 792 | Expedia Points 529 | Delta Sky Miles 175 | Virgin Atlantic Virgin Points 100 | Hotels.com Rewards 6/10 ($135.99)
Message 7 of 9
longtimelurker
Epic Contributor

Re: How to be financially succesful before 30? What skills to develop?


@Citylights18 wrote:

I guess when it comes to delayed gratification before I bought my first property I rented a room from a private house for $450 a month on a monthly basis so I didn't have to break out of lease when I bought. An approach like this can work up to a certain level and it might make sense doing something like this for an extra year or two before buying.

 

This is my opinion owning a place and having a car affords creates more of a lifesytle than just spending your entire life in an walkable efficiency apartment. This also extends to other things like buying a boat, having a dog and traveling.  How long do you want to delay all of that? Personally I don't have some of those expenses and rather not but I can see why people do because they believe it enhances their lifestyle.


Yes, delayed gratification can also be bad, depending on the delay.    A lot of recent research shows that (US) people entering retirement are naturally enough most worried about running out of money.   But in fact (and past performance is no guarantee of future results disclaimer goes here!) many die with more (in real terms) that than they started with and have lived a less comfortable retirement than perhaps they should have done.

 

So certainly don't defer gratification until you are too old/infirm to enjoy it.  For some, not accumulating wealth but spending and enjoying along the way is the way to go.

 

IMO, true wealth DOESN'T come from total cost of ownership or delaying gratification.  It comes from inherited wealth or a combination of luck/skill inventing or investing.   The rest is just some variation of boring middle class wealth!

Message 8 of 9
iced
Valued Contributor

Re: How to be financially succesful before 30? What skills to develop?


@longtimelurker wrote:


Yes, delayed gratification can also be bad, depending on the delay.    A lot of recent research shows that (US) people entering retirement are naturally enough most worried about running out of money.   But in fact (and past performance is no guarantee of future results disclaimer goes here!) many die with more (in real terms) that than they started with and have lived a less comfortable retirement than perhaps they should have done.

 

So certainly don't defer gratification until you are too old/infirm to enjoy it.  For some, not accumulating wealth but spending and enjoying along the way is the way to go.

 

IMO, true wealth DOESN'T come from total cost of ownership or delaying gratification.  It comes from inherited wealth or a combination of luck/skill inventing or investing.   The rest is just some variation of boring middle class wealth!


As you say, worrying about running out is a natural concern, and it doesn't stop once one has what some would consider a comfortable nest egg. Part of the wealth-building mindset is to wake up each day richer than the day before, so if one wasn't dying with more than they started (or retired) with, they'd see that as a failure. I can imagine the typical person rolling their eyes at someone with a solid 8-figure net worth fretting over buying a $80k car, but I can confirm that happens more often than one might think.

 

Could they live more comfortably? Relative. They passed on the new Lambo and the boat, but they're not worrying where the next meal is coming from. One man's comfort is another man's squalor.

 

Building wealth is more than luck or inheritance. It's absolutely also a mindset, which is why most lotto winners and professional athletes end up right back where they started 5-10 years after the spigot turns off. See also: 'shirtsleeves to shirtsleeves in three generations'. Even without luck or family, it's still possible, but it will take more effort. The person who wants to lose 150 pounds can lose it if they really work at it, but they will have to suffer/work at it more than someone who only wants to lose 10 pounds.

Message 9 of 9
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