Sitting here at the age of 31, less than a decade after graduating from college, I find myself reflecting on numerous financial choices I’ve made, particularly during my early 20s, that I now wish I could change. I’m sure I’m not alone in this regard. Wouldn’t it be great if we could revisit our past and steer our younger selves towards wiser decisions in aspects of life including finance, relationships and lifestyle choices? But, ironically, if I, as a 31-year-old, could travel back in time to advise my 21-year-old self, would I actually heed to my own counsel? I doubt it, given my reckless 21-year-old mindset, but that’s beside the point.
We have all made regrettable decisions, underscoring the proverb “hindsight is 20/20”. However, if I had the chance to time travel, here are six financial lessons I’d impart to my younger self.
1. GO ALL OUT TO RETAIN THAT SCHOLARSHIP: Upon entering college, I was granted a substantial scholarship for my education at my preferred institution. Without a clear idea of what I desired to pursue, I chose to complete the basic courses such as math and science first. Those subjects, which were not my forte, led to a relatively low GPA and hence, the loss of my substantial scholarship. This unfortunate development occurred just after my freshman year, leaving me with a full three years of schooling left to fund. Today, I lament the financial burden this put on my parents, given a little extra studying could have maintained my scholarship.
2. SAVE YOUR INITIAL $5,000: Despite losing my scholarship, I decided to work through my college years. My parents generously covered my tuition and rent, with me taking care of the rest. The summer after my freshman year, I secured a local factory job, earning an impressive $5,000 by the end of the season. Rather than using this hard-earned capital wisely, I squandered it, leaving me with only $500 at the start of my sophomore year.
3. ESTABLISH AN IRA ASAP: After graduating, I took up a job without a 401k or respectable benefits. Thinking retirement was light years away, I neglected to open an IRA and save for the future. I spent everything I earned, a common mistake among fresh graduates.
4. AVOID INSTALLMENT-BASED CAR PURCHASES: Upon landing this job, I felt the urge to buy a new car rather than saving for retirement. The short-lived thrill of having a new car was quickly replaced by the burden ofmonthly payments associated with it.
5. SKIP THAT BOAT: I took a while to wise-up after the car incident and a few years later, I found myself financing a 30-foot cruiser for social reasons. The monthly expenses related to this boat turned out to be more than my rent. I can’t help but cringe at those choices today, relieved I managed to sell the boat for the exact price I owed.
6. ENJOY LIFE IN A COST-EFFECTIVE WAY: While I did make plenty of financial blunders, I also had a good amount of fun within my means during college and afterwards. I enjoyed local parks, nature trails, free student events and occasional half-price wine nights. This period in my life taught me that credit card debt is not a requirement for enjoyment.
Looking back, I’ve made a mix of good and bad financial decisions. Both of these experiences, however, have shaped me into the financially conscious person I am today. Were there financial decisions in your early 20s that you now regret or appreciate? What advice would you give to your younger self if given the chance?
