It's pretty common in your 20s and 30s to feel like you're treading water financially – dealing with the immediate bills and expenses and not thinking too far beyond the next year or two. But this is the ideal time to think about the financial objectives you want to achieve. The best rewards don't come without risks, and there's no better time to start setting goals and taking chances.
While you're young, why not invest in your dreams, start a business, or travel to places you've always wanted to see? Get yourself in the game and start playing.
Here are 4 risks you can take while you're still in your 20s and 30s.
1. Start Investing
Do you have some cash set aside for a rainy day? If you do, that's great – but is it sitting in a checking or savings account? If you want to be able to retire comfortably someday, you need your money to grow. That typically happens by investing in assets that grow in value or pay interest. Financial experts typically recommend that people start investing in their 20s — but if you're a little behind schedule, it's not too late to catch up and start setting aside funds.
If you're living paycheck-to-paycheck and find it hard to save, consider taking a look at your tax deductions. Having more withheld from your paycheck each month could yield a nice refund at the end of the year. That's another way to build a nest egg and get started.
Once you're ready to look at stocks, bonds, mutual funds, or other investments, consider putting a portion of your money into a growth portfolio. These funds are higher risk, but also offer higher potential returns. Fortunately, in your 20s and 30s, you're likely decades from retirement and can afford to wait out a holding period of up to 5-10 years. Consider putting some money into stocks for clean tech, marijuana, cryptocurrency, or any other burgeoning industry that's shaking up the world's financial markets. The eventual reward for such risks can be a sizable payoff.
2. Move to a New City
Life is all about change. It can roll over you, or you can roll with it and reap greater advantages in the process. Are you stagnating in your career? Have you always dreamed of faraway places or a different lifestyle? Now's the time!
If you're craving a respite from brutal winters or you want new career opportunities, consider moving somewhere with a milder climate and thriving economy. Changing jobs is one of the fastest ways to increase your pay, and living somewhere with a low cost of living makes it a lot easier to save. For instance, you can get a lot of bang for your buck in a city like Atlanta, which not only has pleasant weather, but also a strong job market with good incomes and surprisingly affordable housing.
Whatever direction you decide to take to invest in change and improve your life, remember this: Change will find you, no matter what. Better to be prepared and make the adjustments happen on your own terms than to be taken unawares.
3. Learn New Skills
People change careers much more easily and often now than in previous generations. If you don't love what you're doing now, start planning about your next act. Invest in your skills and passions to give yourself a brighter economic and professional future. Whether you sign up for a coding boot camp, master cloud computing, get your real estate license, or pursue an advanced degree, this move might require some sacrifice in the short run, but the rewards can far outweigh the risks.
On the other hand, if what you really want is to stop working for someone else altogether, why not leap into the world of entrepreneurship? There are grants and loans for small businesses, and there's a wealth of examples and advice to be found online.
Once you've established your business, you'll have to actively promote yourself if you want to get on the fast track to bumping up your retirement fund. Be sure to join some local business groups, attend trade shows, and network all you can. Once you get going, you'll be able to reap the financial rewards that come with owning your own company.
4. Redefine Success
The FIRE movement (Financial Independence, Retire Early) counsels you to think differently about your money, lifestyle, and goals. By changing your habits and stashing away money now, you'll help guarantee that later in life, you won't be chained to a desk — but you will have the power to make choices about how you spend your time.
This also can mean your life path might not follow conventional norms. Maybe you don't buy a house, live in the 'burbs, drive an SUV, etc., but instead identify a lifestyle that involves the things most important to you. For instance, traveling the world is a dream many people have but neglect to achieve; they get too caught up in the everyday responsibilities of life. But with the right money moves in your 20s and 30s, you can feasibly travel the world now, continue to earn a living, and even save money.
To get started, think of the different ways you could transition your career to fit your goals. The gig economy is rapidly changing the way people work. Will your employer allow you to work remotely? If not, consider becoming a freelancer. (A significant percentage of your peers — 43% of people aged 22-34 — currently work as freelancers.) Consider buying a home to use as a vacation rental while you're gone; it's a great way to set up a second income while you travel and prepare for the future.
Whether it's traveling or relocating, saving or starting a business, If you get going now, you can better position yourself to achieve all you've ever wanted — financially and otherwise.