Advice to 20+ Year Old Me – On Finances
Advice to 20+ Year Old Me – On Finances
Have you ever sat down and thought about how life would be different had you made different choices in your twenties? Well, I just turned 43 and this has been something that has been on my mind. By means am I regretful of my twenties but I am cognizant that my time and efforts could have been maximized had I known what I know now. Life is funny that way, isn’t it? In your youth you have all the potential but none of the insight of your more seasoned self. If experience could be coupled with potential the opportunity for greatest fully utilized. Click To Tweet
Tips For Financial Health
- Make Saving A Priority. I am sure that you have heard it said that you should pay yourself first. When we are young is the optimal time to start putting money away. Doing this allows for the compounding effect of the time value of money to be most impactful. This was a vague concept to me in my 20s but I was also faced with the situation of not having a job until age 27 due to the pursuit of post graduate training. Those were days when I was more concerned with making ends meet on borrowed money than saving. Even during residency, I was not able to pay myself first and literally lived from check to check. It takes discipline and foresight to pay yourself first when in a situation like that, I had some foresight but lacked the discipline in that area of my life was more focused on completing my medical training. In retrospect, I am sure that I could have found $25 or $50 to stash away with each paycheck during residency to pay myself first. The main idea here is that smaller amounts saved the younger you are, the more it compounds over the years. If you do have the opportunity to have a job that offers a 401K plan, then this is a great way to invest in the future and paying yourself first. Towards the end of my twenties, I did manage to put some money away in a Roth IRA and it is neat to see how much it has grown over the years. In a perfect world, I would have saved money with each paycheck in an effort to create an emergency fund of 6 months worth of income.
- Invest. This is something that can be done on a low level but can yield great benefit with time. Youth has the advantage of providing ample time to allow for investments to ride the the storm that can be market volatility. Starting to participate in the market with investments in items or things that I knew about then may have yielded some dividends. Getting started investing can be daunting but here is a great article on the basics.
- Avoid Using Credit Cards. A good rule of thumb is to use cash and not credit cards. I got my first credit card at age 17 and was shocked that it was even possible to do so given I was a jobless student. Nevertheless, I was given not one but three with only a very succinct form filled out one day on campus. The crazy thing is that I was even given an American Express card. Well, as you can well imagine, this was a set up from the start and by the time I graduated from college I had amassed credit card debt (largely having to do with the whole unemployed student status I was sporting back then). I used my cards for everyday purchases, paying bills, and other non emergency items. Granted, I did use them for emergencies when I went to medical school but college was a different story. So I did end up doing several of the things that the experts advise against when it comes to credit card usage. So the bottom line is use cash and use credit cards only for emergencies. Hindsight is always 20/20 vision. Click To Tweet
Thankfully the financial mistakes of my 20s were not devastating but the point of reflection to analyze how things could have been optimized. I am grateful for the ability to have made mistakes and grown from them. It is my hope that someone reading this post will learn from my mistakes and not have to reinvent the wheel so to speak and as a consequence be able to tap into their greatness.
Thanks for taking the time to read this post. I appreciate you. If you found this interesting, helpful and, or entertaining pass it on to a friend and comment below. Tell me the financial advice you would give to your 20+ year old self.
Be strong. Be brave. Unleash your greatness!