Following up last week's Letter To My 20-Something Self On My 30th Birthday, I am continuing the theme this week with a distinct financial slant as I recount 20 lessons I learned about my personal finances in my 20's.

Ready? 'Cause here we go!

1.     Saving something is better than saving nothing.

Often times online wisdom is all about “how much you should save”. People want numbers. They want benchmarks to aim for. That was me in my early twenties, for sure. And then I kind of went the other direction (see here), but the key takeaway is that as much as you want to have fun in your 20’s and balancing having a life with treating yo self and yolo-ing, you will also be very glad you saved at least something when you get to your 30’s.

2.     Understand the power of compounding interest.

I love this one because it goes along with #1. Compounding interest isn’t as potent as it used to be because interest rates are so low, but the concept is really amazing. It goes like this: 10% on $100 is 10 dollars so in year 1 you have $110. If you don’t add any money, it’ll be 10% on $110 so your year 2 total equals $121. This means you were paid an extra $1 purely for keeping your money in the bank for that time period. You didn’t do anything besides be patient and not use it. Your reward? More money in the bank!

Mind you $1 is nothing to phone home about, but in ten years that difference will be $59 of “free” money on top of the 10% you earn on the original investment amount. Imagine how much more it would grow if you added additional funds to it?!

3.     You never really miss what you give away joyfully.

I find that the money I’ve given to people in the past 10 years has not been missed at all. I find tremendous joy in knowing that I helped someone else do something that they might not have been able to do otherwise or would have been a hardship for them to undertake on their own. If you’re adverse to giving money away to a stranger, I’d say think about getting Christmas gifts to your nieces or nephews. Could you use that money on yourself in a way that would yield the same joy they experience? Think about it.

4.     Spend money on experiences over things is actually true.

I hate to repeat something that is basically conventional wisdom, but this one is worth reiterating. The money you spend on experiences will likely dwarf anything you buy yourself. The thought process here is that there is power in the anticipation of experience as well as the reliving of experience whenever we want after the fact. Things lose their luster as time goes on, especially as we acclimate to life as if we have always had those things, but memories last forever.

5.     Taking the time to understanding your taxes is empowering.

I just filled out my taxes this morning and I am reminded yet again how important it is to understand how this works. I’m not an accountant so I don’t want you to think I’m some tax guru. My goal here was to stop taxes from feeling like a foreign language. I want to be able to follow my return and understand how they calculated my refund. At the end of the day, I am liable for ensuring my taxes are accurate even though I don’t calculate the number myself.

6.     Being humble and wanting to learn are necessary postures of healthy personal finance.

Learning something new – see #5 – takes humility and being comfortable with being a beginner. In my 20’s, I tried to own that there was a lot I didn’t know about money so that I felt okay seeking guidance from successful investors as well as scouring the internet for how-to guides and beginner advice. Start where you are and tackle things one-by-one. Don’t be too hard on yourself to get it all in order ASAP.

7.     Know where your money is going.

This one is contrary to the whole “make a budget” cliché. Yes, I have an idea of how much I should be spending on what, but for the most part I think it’s more important to know where your money is actually going rather get caught up in where it should be going. Too many people feel ashamed because they are not able (or don’t want) to adhere to their strict budget that they end up ignoring it and, as a result, also don’t know where their money is going either.

This is a mistake, gals! You can only steer the ship if you know where it’s headed and then adjust it accordingly. Have the courage to be honest with yourself about what you’re currently doing and then ask yourself if your spending habits align with your goals (see #13).

8.     You are not defined by the size of your bank account.

This was a big lesson in my 20’s. God has got me financially and in every other way. I am not defined by how much money I have saved. I’ve had a lot and I’ve had a little, relatively, over this past decade and I actually felt closer to Him in the seasons where I didn’t have much rather than the ones where I had a lot. That’s because during reasons where money was tighter, I was more reliant on God to get me through. Historically, I felt self-confident when I had more money and more “I got this, God!”. It’s not to say that having money is bad, but that there really is no correlation between how much you have and your worth.

Who you are is a reflection of God and your relationship with Him. You will always be precious and delightful in His eyes whether you have a million dollars or one dollar.

9.     Emergency funds are boring, but wise.

Emergency funds are like budgets – so basic – and yet I promise you will be glad you have one! The amount in this category honestly shifts depending on how optimistic people are about the economy, the stability of your current job, and how much of your life is unpredictable. I like to have enough in this account to cover me for 2-3 months, but know that I have money in other places that I could access if something really atrocious happened. I am the girl with metaphorical money under my mattress, in a suit jacket, and in the cookie jar so that when the time comes I’m either pleasantly surprised or tremendously grateful rather than frantic because it snuck up on me.

Another thing to note for this is that you should only spend this money on things that are actually emergencies (see here).

10.  Getting out and staying out of debt is essential.

This one is a big deal because debt really can mess with your mind if you let it. The key here is to be very mindful about what you choose to engage in. I have had genius ideas along the way that I thought I could do if I financed. Some of them, like the School of Ministry and my first car were great ideas (see: here). Others, thankfully did not work out and I think it was God’s provision that impacted that. My personal belief is that God is not asking me to go into debt unless it’s absolutely necessary and if I can’t figure out a way to afford it then I am not meant to have it. This thought process has saved me a lot of heartache and unnecessary stress.

11.  Start saving for retirement. Yes, really.

This is up there with debt and emergency fund as a really important concept to start to appreciate in your 20’s. I’m not talking about killing yourself to reach the amount the internet says you need (been there done that). However, I am saying start anywhere. Any amount is a commitment to yourself that the future is important. Towards the end of your life you won’t be able to finance your lifestyle without savings and you will be glad you set aside provisions! The alternative is to finance it and then saddle your children with the responsibility to put your life in order for you. If that feels too hard to imagine, imagine how you would feel if your parents did it to you. Maybe I’m not the model child, but I’d be frustrated and disappointed if my parents made that decision without consulting me, asking for permission, etc. first. The goal here isn't to fret about the future - God's got you - but it is to be mindful of repercussions and taking measures to allow yourself flexibility as time goes on. You can always give it away later, if you don't need it!

12.  Ignorance isn’t bliss when it comes to understanding your student loans.

Ah, student loans. It’s definitely something I want to mention here because without getting your head wrapped around the conditions, implications, time frames, pros and cons of pausing it, etc. it will not resolve itself and go away on its own. It’s up to each of us to understand the consequences of our actions and figure out what the big picture looks like in order to get through it. The good news is that overtime and with diligence, you will get through it!

13.  Set long-term financial goals.

Dream big dreams, friends! One of our greatest strengths as 20-somethings is our ability to dream and yet we spend most of our 20’s not knowing what to do and focusing on instant gratification rather than the future. Take the time and really consider what you want – own a car, buy a house, go on an epic honeymoon, pay for your future kids to go to college? – and then start building slowly for it. The good part is that if things change you can always reallocate to something else. You can always change your mind about what you’re working towards, but it’s a pretty awful feeling to wake up one day and realize you want to buy a house this year, and never considered that it would take you years to save up for one.

14.  Limit your reliance on your parents.

I know our parents mean well and that this is a touchy topic, but I’m here to tell you that you need to figure out a way to stop relying on your parents. You might have the best relationship with them and they have no problem providing for you. You can even let them splurge on you and it’s completely fine. I’m talking about the situation when your parents are crucially subsidizing your lifestyle: contributing to rent, covering your phone bill, buying you new clothes each season, etc. It is very hard to feel like an independent, self-sufficient adult when you defer to mom and dad to cover the basics of your existence. Yes, there are certain industries that just do not pay a lot. I get that. You just need to ask yourself what you really want - financial freedom and/or a subsidized lifestyle - and then be okay with whatever that answer is. I will say that is it a luxury and privilege to work a job you want to do for a small amount of money because your parents are able to cover you. If anything, be thankful for the opportunities they’ve presented you with. It is not something that everyone is given. Or you can just make the hard decisions  in order to live within your own means.

15.  Build your credit history because credit cards aren’t always a no-no.

I put these two topics together because I think, contrary to the Dave Ramsey mentality, that credit cards can be used for good if you know how to use them. I am not giving you the approval to buy whatever you want on credit. Don’t do that! What I am saying here is that credit cards enable you to gain points and certain benefits, if you know what you’re doing. The first rule with credit cards is to treat it like a debit card. If you do not have the money for it, you cannot buy it. It’s as simple as that. Do not spend money on what you cannot afford. Similar to the “buying a house” scenario, you will most likely eventually need to have credit history to buy or rent a home, lease a car, etc. You wouldn’t know what you’ll need it until someone asks it of you. Start now with as little as you need – I think I used to charge only $30 a month on my card in college which I paid off each month - because length is one of the biggest factors of building your credit history.

16.  Stop comparing yourself to your peers.

Do not under any circumstances compare yourself to your peers. It either makes you feel like you’re better than them or you feel worse off. Either way it contorts reality in a way that is not beneficial. You know what peace feels like. Press into what you think God is asking you to do – this applies to saving, giving, earning, etc. – until you feel content about it and if you aren’t sure ask him. He will not let you wander around unsure of yourself. He knows what you need and how you can best love the Kingdom.

17.  Learn the difference between needs versus wants.

This is another great lesson to learn in your 20’s. What is the difference between needs and wants? For me, need is something I might die or would be severely limited without. You got it, not much falls into this category! To add another layer of complexity, just because I truly need something does not determine what kind of it I need. Yes, I need underwear for sanitary purposes (keeping it real!), but I do not need a pair of Hanky Panky. Same with overall food, and it "needing" to be organic from Whole Foods. Of course, I am not saying that you are not allowed to enjoy your wants, I just think we need to acknowledge what is a want versus a need to realign ourselves with reality and posture our hearts towards thankfulness.

18.  Major in the majors and minor in the minors.

I love this one because I read it somewhere and have completely owned it ever since! The point here is to figure out what your values are, align yourself to your values, and then really de-prioritize anything that is not a core value as everyone’s resources, apart from God, are limited! As an example, for a while there saving money was a huge priority for me and, as a result, I couldn’t spend as much. On the flip side, I moved into my amazing apartment after rent being a minor thing for as long as I can remember, and I had to find something else to minor it as my rent became a major to reflect the shift in what I felt like God was calling me to.

19.  Take advantage of any company benefits.

This comes in many forms, but the general concept is to figure out what comes with the job and maximize it. No, I am not saying to take from the company what is not rightly yours but if you’re entitled to something then leaving it on the table is not smart! Included in this category is expense-able lunches, corporate discounts, paid vacation days, etc. Paid vacation days in particular are free money. They equal hours worked and if you do not use them you are essentially working for less than you are paid.

20.  Know your worth.

While this could be used with a broad stroke across all of who you are, in this context I am specifically talking about knowing how much you should be earning for the work that you do. Most of these lessons focused on giving, spending, saving, and debt, but it all starts with making money and ensuring that you are making what you deserve. The key here is to do your research. What do other people in your field, at your level, and in your city make? Where are you in your range? When you have salary discussions, do you know where you fall in your band and why? Is it performance driven, or reliant on the profitability of your group? You don’t have to go crazy about it, but as I always say: Knowledge is power. And I’d much rather you know what your earning potential is and deviate from it willingly rather than remain ignorant and at the mercy of your employers so may or may not have your best interest at heart.

So that’s the rundown! Do you agree or disagree with any of them? Obviously, this is my experience so I’d love to hear where yours has differed. What lessons do I need to experience that I haven’t and you think I’d benefit from? Head over to the comments section and let me know!