I was recently asked the question if I could go back to my 20s, what would I do differently to build a better financial safety net and grow my net worth faster? Flashback to 1990, this was the year I turned twenty. Thinking back I guess I could have better used my money then spending it on dial-up internet access with AOL, or my first cell phone the Motorola 5200, or trying to perfect my grunge look with all that flannel. Here are the things I wish I did differently.
My parents taught me the basics when it came to personal finance. The helped me open a bank account, showed me how to balance a checkbook, but beyond that, there wasn’t much guidance. I don’t ever recall covering anything on the subject in High School or College. I do remember the credit card applications and the free gifts being offered in the student center each week. If I had the chance to do it over I would certainly educate myself a bit more on the topic of personal finance. Having the education would give me a great foundation for years to come as my income began to increase.
Save More Money
I don’t ever recall savings really being a part of my overall plan. From my first part-time jobs on to my full-time jobs post-college. I’m not sure why. I wish someone would have introduced me to compound interest in 1990. I ran the quick numbers using a net worth calculator and if I starting saving $100 a month since I was 20 I’d have an additional $100k saved if I put away $500 I’d have almost $500k saved. It helps today to have apps at your fingertips to keep track of your overall spending and wealth to keep you better organized. Although I don’t have the opportunity to do it again, this is one of those lessons my three children are sure learning about.
Spend Less than I Made
This ties into the saving more money, I never had any money to save because I was always spending all of it. In my twenties, I’m sure I wasn’t thinking about retirement yet. I was concerned about what the plans were for Friday night, which typically meant eating and drinking out somewhere and spending a good bit of cash. Rethinking it I would still go out, but make sure my savings goals were met first.
Use Credit Cards as a Tool, not a Crutch
Credit cards were always used to cover cash shortages and once used it was all about managing the minimum payment. As long as the minimum payment could be paid the card would continue to be used. Credit line would be increased and more spending would occur. I never saw this as a problem, until one card turns into 5 and after years of abuse, a $100k worth of debt-crippled us. I know better now, credit cards should be paid in full every month and if used properly can gain you rewards, saving you additional money on a number of things. It’s a simple rule and if you can’t follow it, you shouldn’t own a credit card.
There no gaining back the 20 years I’ve lost, but I don’t get hung up in the past I continue to move forward each and every day. I look forward to better educating my three children and seeing them have better financial success early in life than I ever did.
If you could go back to your 20s, what would you do differently to build a better financial safety net and grow your net worth faster?