Money in Your 20’s: Take Big Risks, or Focus on Saving?

Break the bank and take risks, or just focus on saving?

Break the bank and take risks, or just focus on saving?

One of the interesting things about getting older is that we tend to have opinions about what would be good decisions for people younger than us.   It seems like this is especially pronounced the further removed we get from the age bracket we’re talking about.  At least that’s how it is for me.

It can be easy to look back and consider what we could have done differently, and many people seem to do that with money decisions.  Now that I’m a parent of two young kids, I also look at moves people can make when younger.  While my kids are small, I look to the future and think about what would be good for them and others when reaching their 20’s years from now.

I had a conversation recently with a friend of mine, the same age as me and also a parent of young kids, about money moves that would be smart for a 20-something out of college.  We both went to school together, and had similar beginnings to our career.  Much that we do is in parallel, with the difference being that he ended up really being a star in his field and has achieved a measurably higher level of financial success as well.   Thus, we have developed a different view of what people in their 20’s might consider doing upon graduating.

His View – Take Risks and Swing for the Fences

Now, keep in mind that he really didn’t do this himself.  He didn’t take big risks, and never started an entrepreneurial venture.

That being said, his life experience to date has given him the opinion that while he’s been quite successful to date – and he’s justifiably proud of it – a smart person with high upside should take risks when younger.  More than that, he thinks that a risk-taking mindset can be applied to different areas of life.

For example, he would suggest trying to learn as much as possible in a short amount of time after graduation in an entry-level position.  Ideally, this would be in an area of passion.  Then, start your own business and put 100% of your effort into truly making it work.  If it doesn’t, accept the failure and learn from it before moving on to the next venture.  Eventually, your cumulative failures will teach you lessons that will allow you reach big success with one of your ventures.

He also advocates traveling as much as possible when younger, dating as much as possible and not getting hitched in your 20’s so you can hold out for the optimal person.  This is just a side note not directly related to money and career, but adds context to this viewpoint.

Again, he didn’t to this – worked a corporate job, got an MBA, got married in his late 20’s, etc.  However, it’s what he thinks would be smart for someone in his or her 20’s now that he’s older  Go for broke when younger and try for the best with everything, knowing that you run the risk of striking out too.

My View – Focus on Saving and Investing as Early as Possible

Let me preface this by saying that if there is a time to take risks, it’s probably in one’s 20’s.

Nevertheless, there is also something to be said for getting off to a strong start and building a strong foundation.  To me, excessive risk-taking can have negative consequences that don’t manifest themselves until people are much older.

I’d say it’s smart to invest in your career when younger, and focus on that as your primary source of income instead of getting obsessed with going for broke or handling a collection of side hustles as the main way to make money.  Build your career, nurture it, and then you can have the cash flow and foundation to take on side hustles or bigger risks later.

I know people have that have taken different paths and approaches with money, a few at extremes and most in the middle.  At the extremes – and I say that based on society’s view of what is “extreme” – are people who have lived for the moment and those who really tried hard to save.  The latter included a few people who did well in school, got advanced degrees, and also lived at home for a few years after college to save money.  They also avoided expensive cars and other traps, while working hard to grow income through their careers.  Basically, these people saved early and often while avoiding debt like the plague.

Ultimately, these are the people that seem to be really flourishing and living with the least stress once they’re well past their 20’s.  Their investment in their career, and serious focus on saving money right after graduation, put them in a good position down the line after the money compounded.

That’s what I think works, and makes the most sense.  Eventually, with a foundation in place, you can take more chances later on with less downside.  Delayed gratification would seem to provide a better lifetime value, as long as someone can avoid temptations and peer pressure when starting out.

What do you think?

There is a middle ground of course, but I’m curious which point of view you lean toward:

  1. “Take risks, fail and fail more until you succeed when young, while being unafraid to spend on life experiences”
  2. “Focus on building a career, avoiding debt, saving as much as possible by delaying gratification”


  1. says

    I really think i depends on the individual. I’m trying to teach my 3 children about all of these concepts so they have this information and have these choice available to them if they want to take them. Biggest think is to have the knowledge at the young age.

    • Squirrelers says

      I think you have a good point here. While you know how I lean in terms of this question, there probably are some people that are totally wired to take risks and need to…and might thrive. Clearly, the world wouldn’t be what it is today without some of those game changers.

  2. says

    I definitely lean more your way. I’d rather work hard now, delay gratification a bit, and have a solid base from which to jump off of into new adventures just a little ways down the road :) I think it’s always a good idea to take measured risks, though. Engaging in risky stuff just for the sake of the “experience” is what doesn’t make much sense to me.

  3. says

    It’s a hard one for sure. I’ve probably leaned more toward taking risks. I left a big company for a smaller one where I’ve grown in leaps and bounds. I also took six months off to travel last year.

  4. says

    Take risks would be my inclination. I took a risk to quit my steady job and quadruple my income, which let me basically become what I call semi-retired now. I’m freelancing, and I take about a year off in between contracts to do whatever — travel, have a baby (right now)… and then I go back to work, save up the money.. take more time off. It’s the ideal situation for me.

  5. says

    As someone in her 20s, I hate reading advice like this. It is entirely dependent on the opportunities you’re given, it’s not a choice of any kind. I am heavily in debt and was forced to move abroad because there were zero job opportunities where I lived. (In NYC. Seriously. Teaching hiring freeze. Only in America. *smh*) It wasn’t up to me. In the career that I choose, that was simply what I had to do. I had to get a hugely expensive degree to stand out from the crowd. Then there was a hiring freeze the year I graduated with my jillion dollars of debt. So I worked at jobs that I was ridiculously overqualified for, steadily going more and more into debt, to the point where I literally had to have my mother pay my rent for me because I couldn’t scramble together enough cash…. So it wasn’t my choice. I had to take a huge leap of faith and move across the world for a job, from which I was FIRED three months in, for absolutely no reason. (I work at the same school now, two years later, as it were.) I was fired like three days before my flight to ridiculous, third world India. Because I was trying to be frugal and take a cheap vacation. Only to realize I had zero income for the forseeable future…. do you see how this is going?

    I figured it out eventually, but I will never be financially sound probably. Being in your 20s in this generation means not really getting to choose your career/income path. Most people I know spent their early 20s struggling and grasping at straws. The only people I know who actually were able to be stable are working in finance. And they were all absolutely miserable for the first five years of their careers, so…. I guess that’s the way to go if you want to be stable? They also happen to be boring, close-minded, arguably immoral people, so…. good for them for “choosing” to be stable at least?

  6. says

    I’m pretty much 50/50 on this. I do think your 20’s should be about risks – in your career and otherwise. when else are you going to have little responsibility outside of keeping yourself sane?

    Having just recently crossed the 30’s threshold and finally getting married and planning out our first kid, there’s more trepidation and caution with our careers and our savings. but that’s how life goes. I say, be bold but make sure you are giving yourself enough cushion to brace for anything that can happen.

    Thanks for this thoughtful post!

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