The 3-Step No BS Plan for Financial Success in Your 20s

If I were in my 20s and wanted to figure out how to be rich and avoid being broke, here's my 3-Step No BS Plan.

I'm Tyler. I'm a former financial adviser and portfolio manager, and now I make financial content for free so that you don't have to pay for it.

Step 1: Assess Your Debt

Start by figuring out what debt you'll pay down versus what debt you'll let ride. How? By comparing the interest on the debt to the return on the 10-year US government bond, also known as the risk-free rate.

If the interest on your debt is higher than the risk-free rate, pay down the debt. But if it's lower, let the debt ride and invest your money either in the risk-free asset class or in an S&P 500 fund.

Step 2: Maximize Your 401(k) Match

If your company offers a 401(k) match, do everything you can to contribute just enough to get that full match—this is free money! If you make $50,000 a year and your company offers a 5% match, understand that it can amount to a quarter of a million dollars from the company if invested over the long-term.

Step 3: Invest in a Roth IRA

Once you hit the match for the 401(k), I would not max out the 401(k). Instead, invest any leftover money you can afford to invest into a Roth IRA. You'll likely be in a lower tax bracket and have more investing options than in the 401(k). Most importantly, you can withdraw your contributions at any time penalty and tax-free, unlike the 401(k).

If any of this is helpful, sign up for my free newsletter in my bio. Every Sunday morning, I'll send over more insights on how to keep you from being broke.

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