Life’s Biggest Financial Decisions — The Early Years

We make lots of financial decisions every day. However, over the course of our lives, there’s a small handful of decisions that really matter. How well we navigate them will make an especially big difference in whether we struggle with money or live with financial freedom and joy.

As I describe the decisions, please keep a couple of points in mind. First, making these decisions well requires swimming against the current of our culture. That’ll make them seem difficult. But they’re all doable.

Second, if you’ve made some of these decisions poorly, welcome to the club. So have I. But as long as you have breath, there’s time to recover, and there’s time to help some young people you know from having to learn these lessons the hard way.

So, here we go—my votes for the financial decisions that matter most, especially in the early years of adulthood.

How you pay for college. There are two overwhelming assumptions when it comes to paying for college. First, many people assume there’s no way to avoid borrowing. And second, borrowing to pay for college sends young people into the world with a crazy-heavy ball & chain bolted to their ankles, prompting them to delay marriage, put off home ownership, and ironically enough, work in fields other than the one they studied so they can afford to pay for the loans that helped them study the field they can’t afford to work in.

The first assumption isn’t true at all. The second, all too much.

What’s the better choice? Make a commitment in faith to not use debt.

I know. It seems impossible. But it is possible. Every year, some students actually do graduate debt-free. It helps a lot if your parents have been saving for college since you were in diapers. Even if they haven’t, it’s possible.

You know the options. State college instead of a private school. Community college only, or community college and then transfer. Take a year off after high school to work full-time to earn money for college. Work part-time while in college. Once in college, apply to become a resident assistant, which usually comes with free room & board plus some cash.

Start with a commitment to graduate debt-free. Then figure out the details. If you need help, read books by people who’ve graduated from college debt-free.

If you absolutely have to borrow, figure out what the monthly payment is likely to be and then be sure to work that payment into a post-college budget, one that allows enough margin to accelerate the payoff of the debt.

How you buy a car. Here, too, there are common assumptions that do us no favors. Like the assumption that buying a car means borrowing to buy a car. Or the assumption that you need to upgrade every five years. Or every ten.

Here, too, a better path begins with a commitment. In this case, to only pay cash for cars and keep them a long time, like 15 years past their model year.

How you start your career. Sign up for the workplace retirement plan. Right away. And commit to automatically deposit at least 10% of your income to it.

How you manage your career. Get as much ongoing education as you can. The days of guaranteed employment are long gone, but there is something very close to guaranteed employability. That has much to do with being great at what you do. If your company will pay for tuition or other training opportunities, use that benefit.

Who you marry. Be very cautious about marrying someone whose financial life is a mess. I can’t verify this, but I’m pretty certain the phrase “Love is blind” was first spoken by someone who saw one too many of his or her friends disregarding this advice.

I’m not saying don’t marry someone with a lot of debt. As long as they’re a recovering person with a lot of debt. That means they’ve owned up to whatever left them with so much debt and they’ve been doing things differently for a long time.

What you do after getting married. Live primarily on one income. Give off of both and save a big portion of the second income—just don’t build a lifestyle that requires both incomes. This was probably the best financial advice Jude and I got when we were engaged.

How you buy a house. For most mortals, buying a house means taking out a mortgage. But it doesn’t have to mean taking out such a big mortgage that your house owns you.

Wait until you’ve saved 20% for a down payment, and then make sure the combination of your mortgage, property taxes, and homeowner’s insurance add up to no more than 20% of your monthly gross income. If you’re a two-income household, base that on one income.

I know. It sounds crazy. Impossible. I’m telling you, it is possible. And it’s the best way to buy a house.

What you do after having a child. This is when the fruit of all of the above will really be seen. If you do crazy things like buy a house that only requires 20% of one income and build your pre-children lifestyle on one income, you’ll be free to have one of you stay home with your child if that’s your desire.

Now open a 529 College Savings Plan account. That’ll put your kid on a path toward a debt-free college education, which is where this all began. And be sure to read, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money ManagementThat’ll help you put your kid on the best possible financial path.

What would you add to this list? What are some of the financial decisions you made that helped you the most?

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One Response to Life’s Biggest Financial Decisions — The Early Years

  1. Al February 7, 2024 at 1:33 AM #

    Great article, Matt.

    Cars: In 2019 I bought a 2017 Subaru Outback (cash) and donated a 1995 Subaru Legacy to the local rescue mission. The Legacy had 331,000 miles on it! Through out our married lives, we kept our cars for 20+ years and 200,000+ miles.

    College: I joined the military with three semesters under my belt. I left the military 27+ years later with a BS, MS, and PhD, all paid for by the Air Force. ROTC is another way to help pay. My son worked as an RA or RD all of his college life after the first year. Saved a boatload for us. He also took a year off between his sophomore and junior years which helped. No loans.

    Marriage: The only debt either of us had when we married was $500 to her parents for a car she bought months before, and in anticipation of, our wedding. We paid that off pronto.

    Houses: When the Air Force moved us (but we knew we were coming back to the same location), we rented out our house for three years. Some disappointments in the care it received; but financially very rewarding. Because of that initial experience, we had a rental house for over 30 years.

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