This is going to be the first post in a new series I’m writing about the most important financial moves you need to make year by year throughout your 20s. So naturally, what better place to start than with age 20 itself?
I don’t have a very clear memory of my 20th birthday. I remember 19 (my dormmates took me to dinner at a fun tapas restaurant just off campus); I remember 21 (I danced with a member of our college basketball team who is now an NBA star while the band serenaded me with “Happy Birthday” at my favorite frat’s annual spring party); but 20 must have been rather unmemorable, because for the life of me, I can’t remember a thing about it.
But what I do remember about those early years in college is a message my dad literally repeated about a dozen times each August as we made the 8-hour drive from my hometown to campus: No matter what free stuff they offer you, do NOT GET A CREDIT CARD.
Now, that seemed very unfair, coming from a man who had several credit cards to his name. I thought it was very hypocritical of him to tell me I couldn’t have a credit card when I saw him use one on a regular basis. But I heard him loud and clear; what he was really saying was, “If you get a credit card, I will not pay for it.” So, being the rule follower that I was (and still am), I said no to the free t-shirt, the free ballcap, the free frisbee, and the $50 credit on my first month’s statement.
For you see, although I graduated from college with modest student loan debt, I entered the adult world with absolutely no credit card debt. Not only that, but by the time I finally did get my first credit card – about a month after graduation – I was so paranoid about racking up huge bills that I only used it when I knew I had enough cash in my checking account to cover my purchases.
In other words, I learned how to handle credit with maturity. I never used my credit card to book a flight to Cancun over spring break with some of my sorority sister (though I know many who did); I never used my credit card to buy hundreds of dollars in clothes and shoes (though I know many who did). My dad put the fear of God into me, and the ultimate lesson was one of responsibility.
So the most important money move you need to make as a 20-year-old? It’s the same advice my dad offered me years ago:
No matter what free stuff they offer you, do NOT GET A CREDIT CARD!
Note from Crystal: I have slightly different advice – get a credit card with no annual fees and good rewards as soon as you can, BUT never charge anything you wouldn’t have bought with cash you have AND never carry a balance. Then you can build your credit without falling into astounding consumer debt. Willpower is crucial – if you think you’ll be a big spender, no credit card!!!