An interesting thought occurred to me today as I was listening to some of my favorite podcasts. If I could send messages to my younger self, what would I possibly send? For anyone who has seen Back to the Future 2, you should know better than to try to take a sports almanac because Biff will inevitably steal it and end up ruining your life in one way or another. So let’s keep things basic. Simple financial advice and basically lots of pleading for him to stop wasting all his money.
Younger me, this series is for you. You and anyone who is near or in their twenties.
Message #1: You Are Trapped and No One Else Will Save You
When I was younger (I’m 32 now, so I mean when I was about 18 – 22), I definitely wanted to be rich but the way I spent money was a clear indication of the opposite. For the longest time, I had absolutely no savings to speak of. I remember realizing that but thinking that I’d just have to get better paying jobs. The problem with better paying jobs is that an uneducated person won’t know to keep from inflating life to meet the new salary. I also remember feeling trapped. This was sort of good in a strange way because it encouraged me to do a ton of reading, test different strategies for alternate sources of income and just generally gave me a fire. And while I did have that in short bursts, inevitably it would burn out.
There was this feeling like the Universe would come along and offer me a way out. After all, my first word was “money” according to my mother, so having it was inevitable. Don’t get me wrong, I am not a superstitious person. I’m not even a little-stitious. But there was a period in my life where I felt like I was destined for greatness. However delusional that might be, I don’t actually think that’s always a bad thing. I guess some delusions can be good. But now let’s talk about the down side.
The problem with the idea that I was destined for greatness is that I wasn’t taking steps to work on my long, slow game. I was all about the quick buck. So on top of telling myself about being trapped, I would also relay to myself the importance of accumulated wealth. If you’re a long-time reader of anything related to financial independence or passive income, you have no doubt seen an infographic depicting the power of investing earlier in your life. Well, that’s something I would have liked to have seen when I was younger. Something like this infographic from MFEA:
Wow, those lines are so spot on it’s frightening. I know for a fact I could have scrimped together $2,000 every year from 22. It wouldn’t have been easy during those first years, but with enough determination, I could have done it. But the point is that I didn’t. And a huge reason for that was that I wouldn’t have known where to even put all that money. So I think I will save the next post for telling younger me what an index stock is and how I could have been sheltering growth from taxes for the last ten years.
It’s not that I beat myself up for not having invested that whole time. Hell, I will probably look back at 32 year-old me when I’m 42 and want to strangle that guy. On the other hand, 32 year-old me is at least putting forth great effort to help older versions get closer to the dream of financial independence. And, of course, this all goes back to delayed gratification.
Younger me, you don’t have to save everything you make. All I ask is that you save $2,000/year until can afford to put more in. Even if it means skipping on eating out a few times a month. Now, of course, you’re wondering where to save that money. And I’ll tell you. In the next post in the Younger Me series.
This rings quite true for me as well. I grew up in a great loving home but one thing we didnt have or discuss was money. Naturally when i graduated from college and got a job making $40k a year, i blew it all and saved nothing. So now all i can do is correct my path and teach my kids about compounding over time.
Thanks for sharing your story!
I’m sure a lot of writing for this blog is therapeutic for me. :)
You’re spot on about the living situation and the resolution. Really, this is all the kind of things I’ll teach my kids.
Nice post FI – at 27 I’m already thinking wow 5 years since I started working and where has it gone (not my savings account I can assure you). Trying to get family and friends into the mindset of compound interest isn’t the easiest thing to do but someone needs to do it. We aren’t starting that late 27 vs 32 compared to retirement age 62 but at least its now or never.
Right. It’s hard not to blame myself for all that lost growth opportunity. And even the negative part of it, like testing my mettle during the 2008 crash. I’m definitely glad I’m starting now and not five years later, but it still stings. What I’d give to go back to 27 year-old me, even!
In reality, this post is mainly for anyone younger than me who hasn’t started down that path yet.
This is one of the most important pieces of the puzzle. Im actually going to be submitting a new post on this today sometime. The time value of money, and the value of time itself are two things that often go unconsidered for people of their early twenties. Besides why do that when I can get rich quick throwing money at TSLA right?!
Absolutely. Kids don’t realize the power they have now over who they’ll become.
I’ll be looking out for your tweet on the post!
Hi FI Monkey
You’re certainly not too late in joining the FI community at the age of 32, though if you had started at 22, the compounding effect will take much faster. Good luck with that and keep on going.
Definitely not too late but the point of this series is to possibly be of help to that 22 year old out there. Thanks for commenting.
Good advice for folks in the 20s. I wished I had studied more on investing when I was in my 20s. Fortunately, I funded my 401k without really knowing what’s going on.
Div4son recently posted…Union Pacific Corporation (UNP) Dividend Stock Analysis
Thanks! Yeah, that’s exactly who this post is for.
No one told me so hopefully I can spread the word this way!
Good on you for funding your 401k. On the whole, I don’t think many people do that and end up trying to catch up later on.