I am single, in my 20s, live at home, and work a corporate job, which puts me in a unique financial situation. I have been self-educating myself on principles of personal finance over the last year. I’m wondering if you could address some financial guidance for my demographic, particularly how to maximize this stage of life. Personal finance podcasts typically address topics like mortgages and tuition and rarely address the single audience who want to make the most of this time financially.
In the frum world, the phase between finishing school, entering the workforce, and getting married can feel both liberating and confusing. When I was young and single, I remember enjoying the financial flexibility of earning an income while not yet carrying the responsibilities of full adulthood. At the same time, there was pressure to find a shidduch and move on to the next phase of life.
Still, this stage offers unique financial opportunities, especially for people who have minimal expenses because they live at home while earning a healthy income, which is often overlooked in traditional personal finance discussions. Here are several ways to make the most of this period.
Pay Off Debt: Many young people today are burdened with enormous debt, often from higher education. The debate over whether expensive degrees are worth the cost is for another discussion. The reality is that these debt loads can leave people struggling financially for decades. It is not uncommon for me to meet people in their 40s who are still paying off graduate school loans.
If you have extra cash flow and flexibility right now, use it to eliminate debt as quickly as possible. It is difficult to build wealth while carrying large balances and paying substantial interest. The sooner the debt disappears, the sooner you can begin building financial security.
Save Aggressively: Having low fixed expenses early in life allows you to save aggressively and build a foundation that can compound for decades. Treat your low expenses as a temporary superpower. Saving a significant portion of your income now can accelerate wealth-building far more effectively than trying to save later in life when expenses and responsibilities increase.
In particular, maximize contributions to tax advantaged accounts such as a Roth IRA and employer retirement plans. Money invested in your 20s has the longest possible runway for growth.
During my first job in corporate America, I was not making a particularly impressive salary, but I had limited expenses because I lived in a dilapidated townhouse in Washington Heights with nine roommates. That situation allowed me to contribute meaningfully to my company’s 401(k). Maxing out retirement accounts early in a career gives the magic of compounding longer to work and those dollars can grow dramatically over time. Saving early is far more impactful than trying to catch up later, even if your salary eventually increases substantially.
Build a Strong Cash Cushion: Building a cash reserve means more than just creating an emergency fund. It also means creating what I think of as a “career freedom” fund. Having cash available gives you the ability to leave a bad job, switch industries, start a business, or pursue opportunities without constant financial fear.
The first job of your career is rarely the one you keep for life. I can think of only a handful of people my age who still work at the same company they joined after college nearly 20 years ago. Many people change firms, industries, or professional paths entirely.
Personally, I stayed in the same industry for two decades, but I worked at three major Wall Street firms before starting my own company four years ago. Having financial reserves gave me the flexibility to make those moves with confidence.
Incorporate Tzedakah into Your Cash Flow: Just as saving regularly is essential to financial success, giving regularly is essential to building the right perspective in life. Tzedakah supports causes, communities, and people in need, but it also shapes character and middos.
Life and careers inevitably come with ups and downs. Keeping in mind that everything ultimately comes from Hashem helps maintain perspective during both success and hardship. Building the habit of giving reinforces that understanding while helping those around you.
Invest in Yourself: Using part of your extra cash flow to increase your earning power can be just as valuable as investing in the stock market. Professional development in your 20s often produces returns that last for decades. This may include advanced degrees, certifications, professional courses, or specialized training that improves your marketability and skill set.
In addition to the licensing exams required for my career, I attended business school at night. It is impossible to calculate the exact return on that investment, but sharpening your skills and knowledge can differentiate you from others in your field and create opportunities later on.
Avoid Lifestyle Creep: Lifestyle creep happens when spending rises alongside income. The result is people earn more money without actually improving their long-term financial position. This is especially common in the frum community, where social pressure and expectations can be significant.
If every raise immediately leads to higher discretionary spending, you can easily end up trapped on the hedonic treadmill, always earning more but never truly getting ahead. Instead, try to keep your spending increases below the pace of your salary growth.
Maintaining modest living expenses during this phase of life can preserve the financial advantage you currently have and provide flexibility later in life. Additionally, building the habit of not endlessly increasing your lifestyle as your income rises will save you from many financial mistakes that plague so many in our community.
Create Strong Credit Habits: Building strong credit habits means consistently demonstrating financial responsibility. Pay bills on time, keep balances low, and avoid borrowing more than you can realistically repay.
Developing these habits early can create opportunities later in life. Strong credit can help you secure favorable mortgage rates, finance a business, or qualify for other forms of borrowing that may expand your opportunities and wealth.
Set Long Term Goals: Being goal oriented helps people stay focused and motivated. Writing down financial and career goals gives you something concrete to work toward.
Your goals may include achieving financial independence by a certain age, buying a home, growing a business, or reaching a specific savings target. Of course, goals often evolve over time. As the saying goes, “Man plans, and G-d laughs.” The priorities you have in your 20s may not be the same ones you have in your 40s, and that is perfectly normal. Still, there is tremendous value in setting goals and striving toward them, even if the details eventually change.
Enjoy Life: While financial discipline is important, it is equally important to appreciate this season of life. Being young, having an income, and carrying limited responsibilities gives you opportunities that may not exist later.
I am constantly reminded that life comes in seasons. Each stage has its own beauty, but you cannot revisit past ones. Your children, for example, are only young once. You cannot get those years back.
The same idea applies to being young and single. Looking back, I am grateful that I backpacked through Central America and Europe, went skydiving and bungee jumping, and skied in Wyoming, New Mexico, and Utah. For a variety of reasons, those experiences would be much harder to do today. I am happy I used some of my limited discretionary income on experiences that brought me joy and created lasting memories. It is important to spend intentionally on experiences that matter to you. Having an income and relatively few obligations gives you the freedom to travel, explore interests, and pursue meaningful experiences.
The goal of life is not simply to accumulate the largest possible investment account. Some of your money should be used to create joy, experiences, and memories during this unique stage of life. Your current situation gives you a headstart that many people never have, and using it wisely can create financial freedom, stability, and opportunity for years to come.