Financial Decisions in Your 20s to 30s Can Impact Your Financial Future More Than You Think

By Susan


Last Updated: September 20, 2023


Have you ever wondered how financial decisions in your 20s and 30s lead you to where you are today?

Or do you consider how your life could have turned out if you had made a few different choices along the road?

The reality is that some of our early decisions may have a significant impact on where we end up in life, particularly financially. The right and wrong decisions we make in our 20s and 30s frequently have a long-term impact on our lives, owing to the fact that we have more than enough time for those mistakes to pile up.

When it comes to your finances, which financial decisions are the most important to you?

If you're older, you've undoubtedly already given some thought to your life choices. However, if you're still young, you have more time to make corrections before they become too serious. Your previous financial blunders may have led you down one road, but you have the option to choose a different one in the future. 

In this article, we'll be discussing some of the most significant choices we make in our 20's and 30's, and what you might want to change if you still have the opportunity and time on your side:



Financial Decisions in Your 20s to 30s Can Impact Your Financial Future More Than You Think

1. Your residential decision.

Where you reside and how much you spend on housing – may have a significant impact on your financial situation in the future.

It's worth noting, however, that this may be a double edged sword. Living in the cheap south or Midwest may undoubtedly save you money, but you may not have the same career possibilities as someone who lives in a major city or metropolitan region.

The typical rent in a one-bedroom apartment in an area like Los Angeles, or Houston may range from $3,000 to $4,500 per month, but you must consider the potential professional benefits of living in a major city.

While you'll have to pay through the nose for a place to stay, you may be able to develop contacts that lead to considerably higher overall profits.

Also, keep in mind that pay in major cities is typically much greater. In 2023, the average annual pay for a data engineer in Berkeley, California is $159,000 whereas the same position in Kentucky averages around $106,000.

On the other hand, you might never be able to buy a property in Los Angeles, where the median housing price is $963,000. The typical property price in Louisville, Kentucky, on the other hand, is only $225,000.

The simple truth is that where you reside has a significant impact on your capacity to save for the future or buy a home. Your location, on the other hand, might influence your wages and career prospects.


2. Institution of choice.

Your college decision has an impact on more than just your future circle of acquaintances; it also has an impact on your money.

If you attend a less costly school, you may graduate with significantly less debt, whereas a more expensive institution may leave you with student loans for decades.

Unfortunately, this is a far more complicated issue than just selecting between public and private schools. Your school choice may be influenced by your financial assistance package as well as the undergraduate discipline you choose to pursue.

In any case, the repercussions of overpaying for a college education may be devastating.

Tuition and living on campus at a four-year public institution currently costs an average of $26,000 a year. That's more than $104,000 for a degree, and that's only if you go to a public university in your own state.

According to Education Data Initiative, a private, non-profit university can cost you more than twice as much: $54,840 per year on average.

These numbers may lead you to believe that a two-year degree is a superior option. The average cost of tuition, fees, and room at two-year private colleges was around $17,735 in 2020-21.

While graduates with a bachelor's degree or higher earn significantly more during their careers, there are many high-paying professions that just demand an associate's degree.

Whatever path you take, any college loans you carry into adulthood will influence your capacity to build money. As a result, make sure you make the best decision possible.


3. Your marital decisions.

Getting married has a number of financial advantages.

You can, for instance, divide the cost of housing and everyday living expenditures. If your partner's wage is larger than yours, you may be able to enjoy a higher quality of life than you could on your own.

However, if your partner isn't very good with money, the financial benefits of marriage may be severely limited.

  • Are you planning to marry a saver or a spender?
  • Will your spouse foot the bill, or will they cause you more money and stress than you planned for?

Your financial future is influenced not just by whether you marry or share your life with someone, but also by who you marry and their attitude toward money.

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4. Your starting salary: whether you negotiate or not.

You might lose up to $15,000 per year if you don't negotiate your compensation - especially your starting pay.

According to GlassDoor's "Know Your Worth" feature, an online calculator that assists users in analyzing wage data and negotiating pay.

And, as scary as bargaining may seem when you're just starting out and prepared to take virtually any entry-level position in your industry, accepting a first job that pays less than usual can influence your job salary range for years and even to other employment.


5. Your housing decision: buying or renting.

There are several elements that influence whether someone chooses to purchase or rent a property. Thankfully, there are benefits on both sides of the question.

Buying a house has the distinct advantage of allowing you to develop equity over time as you pay down the basis on your mortgage.

In addition, if the value of your home improves, you may be able to sell it for a profit. The average property owner's net worth maybe 50 times more than the average renter's net worth, making it one of the proven methods for middle-class Americans to create wealth.

Home ownership, on the other hand, isn't always ideal because you're responsible for repairs, maintenance, and upkeep. And there's no assurance you'll break even after paying agent fees and closing charges when it comes time to sell.

Renting is a good choice, since you wouldn't have to worry over the local real estate market changes or paying for maintenance.

You also have greater freedom to relocate if a better work opportunity arises.

In any case, whether you rent or purchase has a significant influence on your financial health - for better or for worse.


6. How soon you started saving for retirement.

The earlier you start saving, the better.

When you begin saving for your retirement is just as important as, if not more important than, how much you save.


Because individuals who begin saving and investing early benefit from the compounding power of interest.



Financial Decision in Your 20s to 30s: Your Financial Mentality Matters

While any of the options on this list might lead to a financially prosperous future or a financially disastrous one, your financial mentality is one major factor that may be more significant than others.

In a society when consumption is the norm and almost everyone you know is living over their means, how will you prioritize your saving and spending goals?

Depending on how you answer that question, you might become wealthy or poorer — and this is true regardless of your income.

After all, we've all heard stories of "millionaire next door" types who live frugally in order to save large sums of money on low-paying jobs. Yet, there are many people who make a lot of money and squander it all.

If you handle every financial situation with a poor attitude, you're unlikely to have much money saved by the time you retire. However, if you are committed to saving and only spend on the items you truly desire, you will have a greater chance of achieving your objectives.

Are you going to spend or save your money?

The option is yours, just like every other aspect on this list. 

Editor's note: This article was originally published Aug 28, 2021 and has been updated to improve reader experience. 

Photo by Sora Shimazaki


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