WHEN YOU START EARNING a steady income for the first time, it’s easy to spend too much on luxuries or to take on debt. But it’s also the best time to set yourself on the path toward wealth. These tips, based on the book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back, will help you spend smarter, save more, and even give back to the causes you believe in.

Save one-third of your income

Putting $1 out of every $3 you earn into the bank might sound like a lot, and it is. At some times in your life, such as shortly after graduation or upon the birth of a child, when your budget is strained to capacity, it’s impossible. But at some point, it will become not only possible but essential to creating stability in your financial life. That’s because significant savings are the only way to weather the inevitable tough periods, such as layoffs, as well as move toward longer-term dreams, such as starting our own business. Yes, saving such a big chunk of money each month means sacrificing some comforts and indulgences in the short term, but it’s the only way to get closer to that ultimate goal of financial security.

Don’t scrimp on career-related investments

There’s one area where it’s okay to be a spendaholic, and that’s when it comes to investing in your future earning power. The category includes not only education expenses, but also voice lessons for an aspiring podcaster, how-to books for those with potentially lucrative hobbies, and a new wardrobe for office workers who need to impress the higher-ups. Even hiring a maid service is an investment in your future if you use the extra time it creates to work on your writing or website.

Cultivate your most ambitious dreams

The primary reason many people don’t reach their long-term financial goals is that they fail to ever articulate—even to themselves—what those goals are. Do you want to quit your day job and knit full-time? Or open the next big cupcake shop? Or star on your own reality television show? If you’re having trouble putting your finger on it, ask the people who know you best. Brainstorming with your significant other, family members, and friends can help shake loose your own thoughts.

Pay off all but your cheapest student loans early

Student loans that carry a 5 or 6 percent interest rate (or higher) are costing you much more than your savings can earn in this current low-interest rate environment. That means paying off a chunk of your student loans will immediately start saving you more money than you could if you continue to make those slow and steady monthly payments. Of course, not everyone has the cash to pay off a large portion of their loans, and it will probably take five-plus years after graduation to get to the point when you can even consider it. But once you have a healthy bank account, don’t wait too long to start paying off big chunks of those more expensive student loans.

Don’t wait to invest until you have “extra money.”

Waiting to start a retirement account until you feel like you can afford it might mean that you can never retire. Don’t wait to open up a 401(k) account if your employer offers it, even if you start by contributing just 2 percent of your salary. Soon, you can raise that percentage to 4 percent, and eventually to 10 percent or higher. For extra motivation, plug your numbers into a retirement calculator on bankrate.com, and see how much you need to fund your golden years—it’s probably much more than $1 million.

Give back—on your own terms

pot with coins saving concept


Companies know that we want to make a difference in the world, and they want to profit off of that desire. That’s why so many of them are cashing in on the $600 billion plus “green” industry by claiming to be environmentally friendly when they’re not. It’s so common that it has a name: “greenwashing.” Don’t be fooled by all-natural labeling; investigate why the company is claiming to be good for the earth before spending your money. A similar lesson applies to giving to charitable donations: Use Charity Navigator to check the background of your chosen organization before donating any money to make sure it’s going to use the money the way you want it to.