If you are fortunate enough to work in a white-collar professional job in your 20s, then you should be thankful for the opportunities you have in front of you. However, that decent income also means that you have the potential to squander money on superfluous status symbols. While it is nice to reward yourself for your hard work, remember that you are just getting established in life. In your 20s, you likely have student loan burdens, but it is also a time to start investing if you are able to do so; steadily building a passive income can guarantee financial security later in life. Many of your peers will get caught up in the “rat race” of buying luxury items as symbols of their success, but skimping on these items now can save you much stress in the event of a layoff or other emergency and, in the long-term, can pave the way for true wealth in your 30s and beyond.
Status Symbol Car
As much as I love cars, particularly luxury cars, vehicles are expensive, especially those premium cars with snob appeal. I know it’s become a ubiquitous show of success to purchase a BMW 3-Series when you get that first nice promotion at the firm, but your business sense should not be clouded by your buying impulse. Those sub-$400 leases can be enticing but remember that at the end of the lease period you have to start over again, and should you decide to finance an entry-level luxury car, be warned that those prices you see on television are often for stripped models that rarely exist on dealer lots. Forego the status symbol luxury car and keep your current wheels, or buy an affordable commuter car that holds its value and has a low cost of ownership.
Now, I am not saying that you should go slumming it, but live within your means and think to the future when making housing decisions in your 20s. As you are getting your career off the ground, you will likely find yourself moving a bit, making home ownership inconvenient. Those trendy downtown apartments in hip neighborhoods surrounded by high-end restaurants and fashionable bars can be alluring to a 20-something looking to meet the right person and live the good life. The thing is, you pay a premium for those luxury condos and amenities and you are not building any equity. Let’s say that you do actually purchase one of those posh luxury condos. You still must remember that you will be paying hundreds of dollars a month in Condo Association fees and over the course of a few years, you might have spent enough in those fees alone that those dollars could have been allocated toward a down payment on a house.
Swiss Watches and Fine Jewelry
Nothing says you have made it like a fine Swiss timepiece subtly peeking out from your shirt cuff. Keep in mind that even if you are on the track to partner at your law firm, you still have not made it yet and spending money on such luxuries can actually have a negative effect on the way others perceive you. I am a big watch guy, but I also realize my financial reality and must warn you that if you buy too nice of a watch while you are still in an entry-level position, that piece of wrist bling will not exude success, it will tell others that you might be trying too hard and/or that you are not prudent with your finances. Check out this piece that I wrote about affordable yet tasteful alternatives to costly Swiss watches like the Rolex Submariner and Omega Planet Ocean.
Fancy Italian Clothes
Magazines like GQ and Esquire push the importance of young professionals purchasing fine Italian suiting and I applaud the fact that they are encouraging young men to dress properly. The thing is, those fancy Italian power suits carry high price tags that start out well into the four-figure range. A complete wardrobe of Zegna or Armani suits will set you back the price of a nicely equipped Toyota Camry. Hold off on spending big money on those suits until you are firmly established in your career and have a passive investment income generating money for you – i.e. wait until your 30s, hopefully. Consider suits from Jack Victor or Boss by Hugo Boss; these fine suits represent a happy medium between affordability and true luxury and allow you to look great and be proud of your fine designer threads while also being able to build a nest egg.
Following this advice can ensure that you are financially protected in case of a a layoff or other emergency. Also, it can prevent you from being seen as a 30k millionaire.
Remember that the road to success should be approached as a marathon and not a sprint. Pace yourself.
More from this contributor:
Men’s Fashion: The Affordable Cuff Link Collection
3 Reasons Why You Should Invest in Disability Insurance
Tips for Single Men: Create a Classy Bachelor Pad on a Budget