The Best Money Advice For Young Adults: For 2023 & Beyond

best money advice

Written by Agatha

May 8, 2022

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Every time I hang out with a new group of people and I happen to mention that I’m a financial coach, I almost always get asked…

Which is the best money advice you can give? 

How has it changed your life?

The truth is, it’s hard to pinpoint one piece of advice that applies to everyone as people are in different financial situations and different financial life cycles.

Someone who’s living paycheck to paycheck will need to make different choices as compared to someone who already has a sufficient emergency fund and a well-paying job or someone who has already set up multiple income streams.

But since I’ve done my fair share of:

✅ research

✅ heard different money stories and experiences from my financial coaching clients

✅ made financial progress by attaining debt freedom, and

✅ have open conversations about money every day…

I have narrowed down 3 pieces of money advice that I not only feel can apply to everyone but also can be applied to any type of financial goal. 


The best money advice I can give to young adults


1. Analyzing your purchases based on Cost Per Use


The Cost Per Use formula


A great way to know what brings you the most value so you don’t waste money is by applying the “Cost Per Use” formula.

Simply divide the total cost of the item by the frequency you’ll use it. 

In Germany= they call it Preisleistungsverhältnis = price-performance ratio.

For example, if you buy a $1,500 laptop and use it every day for 1 year, the cost per use is $ 4.12. 

$1,500/365 days.

If you use it every day for another year, the cost per use goes down to $2.05! 

If you own a pair of shoes that cost you $100 and a designer bag that cost you $500, which one is the cheaper purchase?

At first glance, it seems the shoes are.

But if you’ve only won the shoes once since you bought them, the cost per use is $100. 

If you take the handbag to work every day for a month, the cost per use is ~$16. 

In reality, the handbag is the cheaper and more valuable purchase.

By applying the cost per use formula before making any purchase, you’ll realize that the value of any item is directly related to how much use you would get out of the purchase. 


Using the cost per use formula to analyze your purchases has several advantages:


  • It empowers YOU to decide what is a valuable purchase


I could go on and on about which expenses you should cut from your monthly expenditure in order to save money or how much in total you should spend in a particular budgeting category. But at the end of the day, it’s your money. It’s your life. 

You’re the best-suited person to decide which purchases are valuable and which ones are not.

You are the only person who can decide how many times you’ll use a particular item and how important it is to your specific lifestyle.


  • You can hold yourself accountable


You can also hold yourself accountable for your purchase decisions because let’s be honest, your favourite Personal Finance YouTuber (aka me 😉) will not always be lurking by your side at the mall when you’re about to buy yet another pair of shoes. 

So before you hit that checkout button, always do the easy Cost Per Use Math and ask yourself ‘how much value will I get out of this purchase?’

  • You get to be more intentional with your purchases 

Using this formula changed my relationship to spending

When shopping for clothes with two of my friends the other day, I overheard one telling the other…

“The first thing she checks is the stitching and fabric.” 

Yes. I’m that girl. And let’s stop here for a standing ovation to my high school Home Science classes that I attended diligently (and scored an A).

I didn’t know those classes would come in handy but every time I go shopping for clothes, I choose what to buy based on the material (quality of fabric). I can easily identify real leather, cotton, linen etc. Picking the right fabrics for your clothes also results in feeling comfortable and confident.

And before buying, I always read the care labels to ensure that I have the capacity to care for the garment.

P.S For the Cost Per Use formula to work to your advantage for a long time: Take good care of your belongings, for example, take your coats for dry cleaning. 

My cousin always gets shocked when I refuse to buy some clothes no matter how ‘trendy’ they are because how can an overlock stitch be outside a garment?!

If you want to learn more about different types of fabrics and how to take care of garments, here’s a link to my favourite YouTuber’s channel.  

Can we also discuss the absolute nightmare that’s fast fashion?

“Fast fashion means that the brands produce in countries where labour is very cheap because the laws don’t protect the garment workers. The clothes produced are of poor quality and execution, and they get sold at incredibly cheap prices in “rich countries”. Since they are trendy in design, they will get out of fashion quite quickly. In fact, fast-fashion brands even release new collections every 2 weeks, to make clothes previously purchased… obsolete.” – Justine Leconte 

Buying many low-quality inexpensive items might look okay at first but…the costs add up and generally end up delaying your financial freedom journey. A lot of us do end up in debt (just like I did) due to the many low-quality purchases that end up needing to be replaced within a few months.

By analyzing your purchases using the Cost Per Use formula, you’ll gradually put yourself in a position where you can afford investment pieces. An example I can give here is a 100% leather tote bag that fits my laptop and everything a girl needs that I carry almost daily…and I get a lot of compliments 😉 

I can literally go to a mall to run one errand and go back home having not bought anything extra because I only want to own items that I’ll actually use and bring me joy (Marie Kondo, anyone?). 

Apart from wasting your money by having to replace the items often, contributing an enormous amount of waste to the environment,  it’s an absolute waste of productive time and effort (unless you enjoy shopping: I don’t)

And because I’ve been using the formula for a while, I’m currently very satisfied with most of what I own, especially my clothes: I wrote an article on the 10 purchases that actually changed my life

  • It’s the best way to stop your impulse buying habit

Buying stuff on a whim always leads to wondering ‘where did my money go?’ at mid-month. By using this formula, you get an opportunity to step back and analyze how many times you foresee yourself actually using the item. 

And if you’re wondering… 

‘How do I start being conscious about this Cost Per Use concept?’

‘How do you plan for cost per use?’

It goes without saying: BY HAVING A BUDGET

Budget Tracker

You have to be deliberate about your purchases by making plans way ahead of time as opposed to buying stuff on a whim. This is especially important for big-ticket items such as furniture, electronics, vacations, etc.

I keep telling my friends that adulting should have come with a manual because it feels like we’re constantly having to dodge curveballs thrown at us from all angles: and one of those curveballs is the multitude of sales messages in your inbox. 

Without a budget, you’ll always fall victim to sales messages. Through budgeting and setting up sinking funds for big-ticket items, you’ll put yourself in a position where you can buy the BEST quality you can afford. And you’ll know ahead of time how much money to allocate per month for each purchase.

Remember that…

“If you have to replace a less expensive item more often, chances are you’ll end up spending more overall.” – Chelse Fagan

  • It makes decluttering easier!

The Cost Per Use formula will also help you while decluttering as it’ll help you decide if you need to keep the item or get rid of it.

When you do the Math, you’ll realize that the expensive item that you bought for your aspirational lifestyle has just been gathering dust and wasting your money since you’ve never used it or only used it once. That item used to be cash money! Sell it or donate it; life is easier when you narrow it down to stuff that helps you live your best life.

This formula has taught me to think of all (or rather most!) of my purchases as an investment — and you should too!! The concept of quality vs. quantity also comes into play here.

And yes, not everything fits into the Cost Per Use formula as some items are a one-time use/investment such as a flight ticket.


How to apply the Cost Per Use Formula:


  • Big-ticket items such as electronics or a car

If we can go back to our $1,500 laptop example: such a laptop is likely to be a fast, efficient machine that you can use for almost 8 years without having to pay for repairs. And we did the Math at the beginning of this article and realized that if you use the laptop every day for 2 years, the cost per use goes down to $2.05! 

Compared to a slow $500 laptop that you have to replace every 2 years? The total cost will end up being $2,000 without including costs of repair, time wasted that could have been used producing good quality work etc

  • Good quality clothes

This is one of those purchases where most of the time, you get what you pay for. 

  • Furniture

Yup, you also get what you pay for.

Which other category of purchases fits into the above list?

And yes, you can thrift for good quality items at any price range which also end up being good for the environment anyway

And because I know I have thousands of smart blog readers out there, I can’t forget to mention that of course, being able to pay for the best quality investment pieces or buying items in bulk is a financial privilege. Having to buy the many many low-quality items keeps a lot of us stuck in stuck in poverty which is a concept that was best illustrated by economist Terry Pratchett in this quote:

“Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. 

Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

This was Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness.”


2. Understand the game you’re playing


I learnt this lesson from one of my favourite personal finance books: The Psychology of Money by Morgan Housel (The book is also available on Amazon)

He writes: 

“Being swayed by people playing a different game can also throw off how you think you’re supposed to spend your money. 

So much consumer spending, particularly in developed countries, is socially driven: subtly influenced by people you admire and done because you subtly want people to admire you.

But while we can see how much money other people spend on cars, homes, clothes, and vacations, we don’t get to see their goals, worries, and aspirations. 

A young lawyer aiming to be a partner at a prestigious law firm might need to maintain an appearance that I, a writer who can work in sweatpants, have no need for. But when his purchases set my own expectations, I’m wandering down a path of potential disappointment because I’m spending the money without the career boost he’s getting.

We might not even have different styles. We’re just playing a different game. It took me years to figure this out. 

A takeaway here is that few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviours of people playing different games than you are.”

This money advice isn’t just applicable to decisions regarding clothes, cars, vacays and homes. You should also use it while deciding what to invest in: you don’t just wake up one day and buy X asset, stock or bond, perhaps because your friend convinced you, everyone is investing in it or for fear of missing out because people are making money. 

Need I say more?


3. How long can you stick around?

I learnt this lesson while listening to a podcast on The Tim Ferris Show: every 10 years, something crazy happens in the financial world such as a recession or COVID-19.

When it comes to your investment choices, the ability to stick around for a long time, without wiping out (by a financial emergency or something completely out of your control such as a pandemic) or being forced to give up, is what makes the biggest difference.

Crafting your investment portfolio in a way that you can stick around for the longest time should be the cornerstone of your strategy, whether it’s in investing or how your run your business.

You have to position yourself to be financially resilient for whatever comes your way. If you’re wondering how to, I can help you with that when you sign up for my one-on-one financial coaching.

Which is the best money advice you’ve ever received? Teach The Wealth Tribe in the comment section, I respond to ALL comments 🥳

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