13 Things I Wish I Would Have Known About Money In My 20s
In my 32 years on this earth, there have been wins, losses and a lot of tweeners, of which I'm still trying to figure out the results. I can't go back in time and change the past, and I don't really want to.
There is a reason I am where I am today, and it's because of the choices I made in the past. But, how much easier could I have had it if someone would have told me these things sooner?
Here are 13 things I wish someone would have told me when I was 22 that I now know at 32:
1. Get on a budget.
There is a sobering fact that 76 percent of American households are now living paycheck to paycheck. Don't fall into the majority and live hand to mouth. Instead, start learning to live on a budget, and go as far as to live on less than you make.
How dare me for even saying that, right?
We now live in a world where we no longer have to be patient, we're taught we don't have to earn anything and we should have it right now because we're special. Well, keep believing this, and you're going to find yourself working for those who chose the old fashioned way of living below their means and following a monthly budget.
Try going on a road trip without a fuel gauge and see how that works out. Chances are, you've probably already been there and have the scars to prove it.
Don't know where to start? Try using the Spreadsheet Budget or the classic Pencil and Paper Budget (PDF).
2. Take a few more (calculated) risks.
I don't mean try skydiving without a parachute. I am talking about the idea, the dream or some crazy goal that you know is just about impossible. Stop thinking about it, and go after it. Don't play it safe.
I had some pretty wild ideas in my head when I was 23, and now I regret not going after them. Don't end up asking yourself "what if?"
What if I went after that crazy goal and failed? What if I tried and went well beyond those impossible goals I once had? Knowing what I know today, I would much rather live a life full of “oh well” than a life full of “what if?”
The point is, you have to take a few risks in life, or you're going to constantly wonder "what if?" You know what happens when you fail in your 20s? Not a damn thing because you have a ton of time to get back up on your feet, re-adjust and try again.
What if the Wright Brothers didn't take risks? What if Walt Disney packed it in after he went bankrupt the first time? What if Jeff Bezos didn't start selling books out of his garage? What if?
The biggest risk is not taking any risk. In a world that's changing really quickly, the only strategy that is guaranteed to fail is not taking risks.
--Mark Zuckerberg
3. Build wealth right now.
You're young, and you keep telling yourself that retirement is so far away, so you will invest later. Guess what? Retirement is no longer an age for people.
Pensions are drying up, and Social Security is becoming a joke. Since both of these things are age-dependent, you can see why I am telling you retirement isn't an age -- it's a number. Start investing in yourself now, and put retirement on your terms, not the government's or your employer's.
Also, do you know how much easier it is to build wealth when you start now versus starting later? I sure wish I would have seen the "Ben and Arthur" example when I was 18 instead of 28.
Open up a Roth, and max it out every year, and your older self will be traveling the world, swimming with dolphins and doing whatever you want. It's almost cheating if you start early (almost).
4. Travel everywhere.
Save up some cash, and go somewhere. I don't care where, but book a plane ticket and travel somewhere you saw on the Travel Channel. Don't keep putting it off.
Someday, when you have a career, a spouse and two beautiful kids, you'll still get to travel. You'll travel to Disneyland and ride the Mad Hatter's Tea Cups 23 times in one day and then hit up the Build-a-Bear Workshop.
Go stand on the equator, snowboard in Alaska, drink beer in Germany and get a tan in Cancun while you aren't strapped down to more important things.
5. Don't pay $7,000 for a T-shirt.
You went to Arizona State University, and you were offered a free Sun Devil T-Shirt on your first day. The only thing you had to do was sign up for this sweet new ASU Credit Card. The card even had the Sun Devil logo on it, so when you used it, people would know your heart belonged to the maroon and gold.
Remember that amazing feeling? Ah yes, stupidity at its finest.
Fast forward 10 years, and you're going to be the owner of a $7,000 credit card balance at 22.99 percent. Also, the free shirt ended up becoming a rag for your roommate's girlfriend who threw up in your car. The point is, stay away from credit cards, and stay away from debt.
Yes, you're going to have to give up those precious points and airline miles. But, until you meet a millionaire that says, “The secret of my success was those free points and airline miles,” you may as well pay with this green paper stuff they call "money."
6. Get life insurance ASAP.
If someone tells you to hold off on purchasing life insurance because you're only in your 20s, then that person is an idiot. Everyone needs life insurance because everyone has a chance of dying.
“But, I don't have a family or anyone who depends on me.” This is true, but what if something happens to you now?
I have a friend who was diagnosed with multiple sclerosis when she was 27, and there isn't a life insurance company that would take a second look at her now. Luckily, someone told her to get Term Life Insurance when she was 23 years old, and now she is insured for $700,000 until she turns 48.
Today, she has a hubby and two kids and knows they are going to be taken care of if something happens to her. Term life insurance rates are ridiculously low right now. Don't wait another second; get it now.
7. Drive a piece of crap.
Brand new cars lose 11 percent of their value from the time you leave the dealership and get in your driveway. Then, over the next four years, they lose 60 to 70 percent of their value.
If you buy a brand new $31,000 car, it is going to only be worth $11,000 in four years, and chances are, you financed it for five to six years. This level of depreciation for a piece of metal to impress a stranger at a stoplight is equivalent to driving around once a week, rolling down your window and throwing out a $100 bill.
I promise you other people would love to take the depreciation, and by all means, let them. As soon as they're done riding down the depreciation, you should buy it back from them at a 60 to 70 percent discount from the MSRP.
Don't talk yourself out of it by saying, “Older cars always break down.” I promise you there won't be $100-a-week fixes for the first four years.
I'm debt free now, have a much higher net worth than I did at 22, and I drive a piece of crap, even when I no longer have to. It's not because I am cheap (maybe a little), but I would rather put my money in stuff that goes up in value than something that plummets like a lead turd in an outhouse.
New cars and car payments versus older cars paid for with cash will be one of the biggest separators between you being wealthy or not. This one is simple: Do it.
8. Rent (because you're broke).
Renting is not evil, it's not stupid, and it's not going to cause you to go to hell. Renting is a smart move if you're just starting your life.
When something breaks and you're renting, you call the maintenance guy, and it's fixed. When something breaks in your house, you usually shell out $1,000. Give yourself a few years to build up some savings for a down payment, figure out where you want to live and enjoy the freedom of renting.
Just remember that renting is not supposed to be a forever thing. It's just there to get you over the hump in life and to keep you out of foreclosure.
9. Get back up.
You're going to lose, you're going to fail, and you're not going to like it. Who cares? Get back up, and keep trying.
It doesn't matter if it wasn't fair because it doesn't have to be. Fair and equal are not the same thing.
It's not your fault for believing it is. Society does a pretty good job of trying to make you believe life is supposed to be fair, and everyone deserves a trophy. This can't be further from the truth.
You're going to get passed up for that promotion, the pretty girl or handsome guy isn't going to call you back and the ref is going to blow the call at your next softball game. You will learn 100 times more from every crash and burn than you will from all the home runs. See failure as an opportunity to get even better, and then get back up and try again.
I've failed over and over again in my life, and that is why I succeed.
--Michael Jordan #23
10. Black coffee and sun block are everything.
You are immortal in your late teens and early 20s, and then boom: It happens. You realize that too much pizza and beer will cause you to get fat, and too many sunburns can actually turn into cancer.
My point is, be proactive and realize that "one day" is approaching rapidly. Black coffee is delicious, it will keep you awake, and it won't pack on the pounds. The white line of sunblock on your nose doesn't look cool, but it will save your life.
When you leave your 20s, it will become very obvious that looking cool and being cool are no longer the same. Be cool, drink black coffee and for goodness sakes, put on the SPF 30.
11. Build relationships that matter.
Think about someone in your life whom you admire and respect. Chances are, what you most admire about the person is how he or she treats you.
Relationships are key to becoming and remaining successful in life. The people who understand this and continually place people first and business second are the same people with the most success. No amount of college education, work experience or drive can outperform relationship building.
I look back over the last decade, and I see a consistent pattern of my success and opportunities from the relationships I have created over time. My wife I am married to, a promotion at work and an opportunity to write my thoughts in this article all came from building strong relationships.
So, before the day is over, pick up the phone and call a friend you haven't talked to in the past six months and ask how he or she is doing. You will be surprised how a simple phone call may change the person's day, life or even your own.
12. Give.
Give your money, give your time, and give your everything. (It's what rich people do.)
The most memorable times I have had in my life aren't the vacations I took or the stuff I bought. They're the times when I'm able to make a difference in someone else's life because I gave. I wish I would have done more of it.
Understand that you don't need to give away your life savings. It can be as simple as buying a cup of coffee for the stranger behind you in the line at Starbucks or leaving a $100 tip on a $10-lunch to the waitress. Take a less fortunate kid to a college football game, or take a teenage girl who is in need of a one-day shopping spree at the mall.
13. Find a mentor.
You need a mentor who is going to praise your wins and point out your mistakes. You need someone who is ultra successful and someone who is willing to teach those who are willing to learn.
Who do you look up to, who do you want to be like. Who do you respect?
That person(s) is your mentor. Ask that person if you could take him or her out to lunch once a month and learn from him or her. You will be surprised at the honor you are giving this person when asking him or her to mentor you.
Learn from this person's success stories and mistakes, and ask the person for advice. Remember that this person was once in your shoes, and he or she made it to the other side.
There aren't shortcuts in life, but there are roads that have fewer stoplights and not as many speed bumps. Ask your mentor for directions.
Congratulations younger, little Chris. I just made you a millionaire! Now, take some of your winnings and buy everyone in line at the coffee shop a sugar-free, non-fat, caramel macchiato with almond milk.
One more thing: If you have an idea of a blog, start it sooner. Be good to yourself, your friends, your love and your money.
