7 important things every 20-something should know about money

7 important things every 20-something should know about money7 important things every 20-something should know about moneyMy co-founder at Digital Press said something to me a while ago that fundamentally changed my perspective on money.He said, We havent personally experienced a recession yet.I was only 18 years old when the markets crashed in 2008.I hadnt yet stepped into the real world. I didnt have a full-time job, or a working relationship with money. I didnt truly have context or a larger understanding of what a crash meant, and how it was impacting peoples lives.Looking back, of course, it makes sense why my parents were overly stressed during my senior year of high school. I can at least imagine what they must have been feeling. But I would be naive to think I truly know what that sort of burden feels like myself.At 28 years old, I try to remember that one day I will most likely experience a similar economic burden.When youre out of school, and you start working your first jo b, and even as you begin to make strides in your career, it can be very easy to think that whats currently happening will happen this way forever. As soon as you start making good money, you assume the good money will keep flowing.Older, wiser, mora experience people than me know this is far from the truth.As a result, I try very hard to remember that life ebbs and flows. Markets go up, and markets go down. Opportunity will boom, and opportunity will slow. And those who remain successful over the long term optimize for these waves of change.Here are 7 things I encourage all 20-somethings to keep at the forefront of their minds when it comes to personal finances1. Its not about how much you make.Its about how much you save.My dad used to say this all growing up, but again, this is a lesson you have to feel and encounter in your own life to truly understand.I know plenty of people who make $250,000 per year, and save $5,000 per year. They live terrific lives, but they also put themsel ves at an unnecessary amount of risk.Conversely, I know people who make $80,000 per year, and save $20,000 per year. They live modestly, but they set themselves up for success in the long run.I strongly encourage you to live like the latter. And as your income scales, so too should the amount you save.2. Never underestimate Cash On HandWhen I first started making a little bit of money, I put everything I had into stocks.I wanted to start seeing my savings compound on themselves.This was great in theory, right up until the moment I decided to leave my 95 job and become an entrepreneur. Suddenly, having money in stocks, although liquid, felt unnecessarily risky. If the markets tanked tomorrow, that would severely affect my safety net.Part of saving money means having a balance between cash you invest, and cash you keep on hand. A good rule of thumb a mentor of mine gave me was to always have at least 3 months of living expenses on hand. Personally, I prefer 612 months.3. Live by the 5 0/25/25 modelSince the moment I graduated college, Ive taxed all of my side-hustle income at the highest tax bracket.The reason I do this is two foldFirst, I wanted to begin cultivating the mentality that one day I would end up in the highest tax bracket.And second, I never wanted to end a year and realize I owed more money than I had set aside. I wanted to pay myself a bonus at the end of the year - not need to withdraw even more money to make up for my math error.In the same way I tax all of my side-hustle income at nearly 50% (meaning I put 50% of everything I make away in an account to pay taxes with at the end of the year), I also try to save at least 25% of the remaining 50%. So that means for every $100 I make, I put $50 away for taxes, $25 into savings, and leave $25 to use as income I can spend on living expenses, travel, restaurants, etc.The reason I love this model is because it keeps all my primary variables constant (taxes + savings), and if I ever want to spend more o r upgrade my lifestyle, then I need to find ways to make more money overall - instead of taking money out of taxes or savings.4. Have a plan for the worse-case scenarioOne of the biggest reasons Im so adamant about saving money is to be able to navigate another recession.Every 20-something, regardless of how much you make (I was saving $20 per month back when I first graduated college and was making just about nadir wage), you should work to save and build a financial foundation. Its one of those things that seems impossible or even insignificant when you arent making very much, but you have to continuously remind yourself that small steps really do add up.$50 will turn into $100.$100 will become $500.$500 will become $2,000.And before you know it, youll have $5,000 in your savings account.The first few years of saving are always the hardest. But after about 3 years of cultivating the habit, and as soon as you see that first comma in your savings account, your entire mentality will change - and youll realize the value of saving over the long term.5. Work to create multiple streams of revenueEspecially in todays world (where Millennials struggle to find jobs - and the Internet is an easily accessible resource), its imperative that you build multiple streams of revenue for yourself.For example, here are mineI pay myself a salary out of my company, Digital Press.I published a book, Confessions of a Teenage Gamer, as well as a handful of smaller eBooks on my website.I am an advisor to a couple blockchain companies (paid as a consultant)I wrote for Inc Magazine for about 3 years (and was paid per pageview), and recently started publishing my work under Mediums paid program.Your goal should be to create 7 streams of revenue for yourself, so that if one declines, the others can keep the ship moving in the meantime (while you either repair what went wrong, or create a new stream of revenue for yourself).*Bonus my belastung tip here would be to take all streams of r evenue except your primary (salary) and have them go directly into a savings/investment account. This will force you to continue living within your means, while working to increase the amount youre able to save or invest.6. Spend time around financially prudent peopleThis is a statement that should scale based on income level.Again, there are some millionaires who spend every penny they make. There are other millionaires who save or invest a large % of their income. You want to hang around the ones who live like the latter, and not the former.The biggest reason this is so important is because, especially in your early 20s, you wont have very much extra income to save or invest - which means, of what you do have, you want to put it to good use. And if you hang around people who blow their money, chances are, you will too.Instead, I encourage you to seek out people who are very responsible with money. For me, I sought out people I knew were successful and yet didnt live overly lavish lifestyles family friends, people in my network, etc. I wanted to know how they treated their money, so I could learn how to do the same.7. Dont ever bet it allIf you are ever faced with an opportunity for a financial upside that requires you to put it all on the line, do not accept it.When youre young, these kinds of decisions are fairly easy to recover from. Even if you were to bet it all and lose, you would still have years upon years to make it back. Youd be fine.But the reason I strong discourage this way of operating is because itis the beginning of an even worse habit that can linger over time. You dont want to get used to betting it all. You want to get in the habit of betting what youre willing to lose, without compromising your long-term financial position.This article was originally published on Medium.