In my 20s and early 30s, I got myself in a good bit of debt. I didn’t have great work relationships and wasn’t all that productive. Out of necessity, I was adept at paying down my debt using some solid strategies. But I also used my debt as an excuse for social isolation and deprivation. It wasn’t until I increased my social intelligence that I really started to make money and build wealth.
Recently, I was asked by a reader what mistakes a young professional should avoid. As you’ve seen above, I have experience making mistakes and I also see them made by colleagues, vendors, and job applicants every day.
Here is my list of mistakes that a young professional should avoid:
1. Thinking you are entitled to a job just because you have a college degree.
The quicker you learn that experience and results are much more important than your degree, the better off you’ll be.2.
2. Thinking that anyone else cares about your success.
People are busy. They have their own lives and weird hangups to deal with. No one is going to come along and say “Hey Jimmy, I noticed you have been in this dead-end job for three years. Remember all the dreams you had? Let’s work on those!” You have to advocate for yourself and proactively make friends and mentors that do care because 99% of people won’t – nor should they. You are responsible for your life.
3. Not taking advantage of a 401(k) match.
This is free money. You give yourself an instant raise by contributing up to the match from both the match and the tax savings on the money you contribute. Time is on your side so contribute right away to access the full match – even if you have student loan debt.
4. Spending more than you earn.
This is obvious. Just don’t spend more than you earn. Otherwise, you’ll get into debt and that will have long term consequences. I know that life is expensive if you just go on autopilot and do what everyone else is doing. Be different and creative.
5. Being a victim of debt.
You have debt. Stop wallowing in it. Attack it. There has never been a better time in history to crush debt. Technology allows you to make $1,000 a month with your extra time and you don’t even have to have a boss. Get a second or third job (“side hustle”) to pay off the debt. It can be a side hustle like walking dogs on Rover or Wag, delivering food on your bike with Postmates or Uber Eats, blogging, etc. Get out of debt quickly and don’t sit around being negative like the other 95% of those in debt. Just take care of it and get on with your life.
6. Paying your full rent.
As an example of the above, you can be creative with your living situation since you are young. Try to get a property as soon as you are able and rent other rooms to friends so that you can get them to pay what would have been your rent. Yes, this is hard and it requires some capital but it will pay off relatively quickly financially. Don’t get sucked into making someone else rich by just doing the easy thing and getting an apartment in an expensive area. If you can get a duplex or other multi-family situation, so much the better.
7. Cash is king.
You may not feel you have a lot of it but find ways to save cash. Cash can allow you to make a down payment on a property to do the above house hacking. Cash can provide you the freedom to leave a bad employment situation. Have liquid cash of three months living expenses available so you never feel stuck and you can take advantage of opportunities.
8. Think about how to add value.
A big mistake is not having empathy for your boss and teammates at work. You need to learn to see things from their view. What in life is important to your boss? Is it getting home by 5:30 to her kids? If so, you should never hold something you need to be reviewed until 5:15 and you should do everything you can to optimize her workday to help her get out the door. If you help her, that is how you get ahead. Find other people’s motivations and help them achieve them where you can. You’ll be rewarded tenfold.
9. Don’t take low-paying “change the world” jobs.
Personally, I think taking jobs with organizations that don’t have budget and resources is a big mistake. You can change the world a lot faster by taking a consulting job or a Wall Street job than at an underfunded non-profit that can’t pay you your economic value (many non-profits are funded well enough to pay you but that isn’t what I’m warning against). When you take better-paying jobs, you can donate money back to causes and you also make connections that can better influence those causes. Get moving on building wealth and making an influential network early so you can affect great change in the world as your wealth grows and network matures.
10. Consider what you are buying with grad school.
Going to grad school can be an expensive mistake if you are not very intentional about it. Except for the top five schools in your field, it really isn’t worth paying for a brand name. If you can’t get into (or don’t want to get into) a top-five school in your field but you need an advanced degree in your field, find a school that is economical but that will provide a great network. If you don’t need a network (most people need a network during their career) then just find the most economical school. Really make sure you need the degree and not just more experience and results (see my first point).
I am sure there are tons more mistakes I could list, but if you try to avoid these as a young professional you’ll be way ahead of where you’d be if you didn’t. Enjoy the time in your youth! You cannot get it back.
The FIIntrovert’s goal is to help 1,000 introverts reach financial independence through his blog. Extroverts and ambiverts are welcome too, but he knows they didn’t need a special invite. When he’s not writing about personal finance and career advice, he enjoys making his wife jealous by spending copious amounts of time with his dog, consuming non-fiction, playing guitar, and skiing.
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