Most of my financial planning clients are business owners, older folks who want to focus on retirement planning, or sudden wealth recipients (think inheritance, lawsuit settlement, business sale, etc.). I’ve been working with clients for over 20 years, so many of my clients now have kids of their own that I also advise. These younger clients – Millennials for the most part – often have similar financial questions and concerns. They are worried about student loan debt, finding a good job, and creating financial success. I enjoy these conversations and they have caused me to think back to when I was younger.
What are a few of the things I wish I knew then? I’ve come up with a list. It’s not exhaustive, but I think it highlights many of the more important ideas that would have been critical for me to know when I was younger, and are equally as relevant today for Millennials (and really anybody who wants to improve their finances and life).
In no particular order, here are 20 things I wish I could tell my 20-year-old self…
- Take bigger risks. You are playing it too safe. You are worried about little things and worried about failing when you shouldn’t. The time to learn to walk is when you are young and short. If you fall, you don’t fall that far. You think you have so much to lose if you fail, but you don’t when you are young. This is the time to take the big risks because you have time on your side if it doesn’t work out. Do you think when you’re older and have a mortgage, kids, bills, and a career that it will be less risky? Think about a risk that scares you – it could be starting a business, inventing something, taking a year to join the Peace Corps, backpacking across Asia, whatever – and then think about risk versus reward. If it doesn’t go well, what could you lose? I’ve talked to many older people who have regrets. People who say, “When I was younger I wish I would have…” Guess what? You are younger. Now is the time! It will never be less risky than it is today.
- Invest in yourself more. The single best investment you can make is in yourself. This is especially true when you are younger. Why? You get to benefit from the education longer. Think of it this way, who is going to benefit more financially, the person who becomes a lawyer at age 72 or age 22? And it’s not just formal education or degrees that I’m referring to. Invest in yourself can mean anything where you are learning and growing. It includes reading, taking online courses, getting certifications, or even things like personal development programs. You are your best asset. The more you can invest in yourself the more valuable the asset becomes. What if you took an online course on how to become a better negotiator? You’d have 70 years where you could benefit – negotiating a better price on cars, houses, and even raises. I always suggest you learn a skill before you need the skill. This means keeping an open mind about what to learn and an open wallet. Nowadays, there are many free courses available, but don’t be afraid to spend money to grow. It’s the best investment you can make.
- Get money smart. This is one of my favorites because it is so easy and it will pay you back year after year. One of the reasons people struggle financially is because they make uninformed decisions, but more commonly, they make no decision. Financial paralysis is real. I see it often in my practice. Nobody said investing or tax or personal finance was easy. In fact, it can be mind-numbingly complex. This causes a great deal of people to avoid financial decisions because they lack financial confidence. The mistake most people make is that they think they need to know much more than they really need to know. You don’t have to be an expert in all things money. You just need to learn a few basic principles and you will be far ahead of the pack.I recently published my fourth personal finance book, Get Money Smart: Simple Lessons to Kickstart Your Financial Confidence & Grow Your Wealth.What makes this interesting is that I didn’t even want to write it. A couple of years ago I was working with a 22-year-old client who received a large lawsuit settlement. He admitted that he didn’t know very much about money, taxes, or investing and that he was nervous about being responsible for so much money. He was thirsty for knowledge and asked for a recommendation for a simple book that would give him a brief introduction to the world of personal finance. “No problem,” I said, assuming there were dozens of great options from which to choose. Well, a week later I could still not find anything even remotely close to what I knew he needed. Instead, we decided to have weekly money coaching sessions where I would take a concept and do my best to explain it as simply as possible. I enjoyed doing this so much I decided to write Get Money Smart based on these lessons. If you want to increase your financial knowledge and confidence, this is a good place to start. Or if books aren’t your thing, sign up for a free Get Money Smart video course or take advantage of countless podcasts, audiobooks and webinars that will help get you money smart.
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- Move to opportunity. Most people will move for opportunity, but I think you should strongly consider moving to opportunity. What’s the difference? Moving for opportunity means you already have a job or position waiting for you, but moving to opportunity is being in a place where opportunity exists. I grew up in a smallish town where I concluded there was less opportunity, so I moved to Los Angeles without a job or plan. I strongly believe there is a geography of success. There are areas where ideas, jobs, and opportunities flourish. Be flexible and open to moving to these areas. Just because you grew up somewhere doesn’t mean you can’t create a new life somewhere else.
- Be more thoughtful about your life and goals. It’s easy to be passive and reactive. That’s the default. The problem is that when you don’t take an active role in your own life, you become a pawn for someone else and their life. This doesn’t mean you have to have all the answers, but it does mean that you have to spend some time and thought about what you want to accomplish, be, and obtain. What is important to you? What do you want from your life? Think about these questions and come up with answers – even if they change (and they will). Be the architect of your own life.
- Be obsessed with growth. This is one of my favorites because it can mean the difference between a mediocre life and an incredible life. Be obsessed with growth means that you are relentless about learning, experiencing, and become a better version of yourself each and every day. The common theme throughout many of these ideas is replacing passivity for activity. Trust me, as you get older there will be more demands on your time and energy. The only way to deal with the onslaught is to set priorities for yourself and not fall into a lull of reactivity. Be obsessed about doing things that are new, that scare you, and that will lead to your growth.
- Develop the habit of saving/investing. Earlier I suggested you should spend money on yourself to learn and grow. You should also get into the habit of saving and investing even if you start with just a few dollars a week. The amount you save is less important. It’s the habit that you are creating that is important. When you make more money you will already have the “muscle memory” of saving and investing. To make things even easier, there are many apps that can help you save and even invest small amounts of money. Take advantage of these and get into the habit of saving at least 10% of your income.
- Do not take on debt for school. This idea is probably the most controversial. There is one camp that says to do whatever it takes to get a degree – including taking on a lot of debt. I am not in that camp. You already know how strongly I feel about education and growth, but I think you can be smart about how you pay for it. There is no shame in going to a two-year college before going to a university. It can save hundreds of thousands of dollars over your lifetime and you can still get your four-year degree. You should also consider working part-time while in school. This can help cover some of your expenses and keep you focused. Most of the successful people I know worked while in college and they agree that it not only helped their finances but it helped them do better in school because they were more focused and disciplined.
- Forget about balance. I used to aim for balance until I realized I was getting mediocre results in everything I did. Balance, as most people think of it, is a joke and it will cost you dearly. Instead, commit all of your time, attention, and energy to one project or goal, make significant progress, and then shift to another project or goal. When I write a book, I become obsessed with it. Balance goes out the window. Any free time I have I am thinking about or writing the book. This means that I may temporarily neglect other areas of my life, but I’m okay with this because I know it is temporary. If you have to check out from your friend group for a couple of weeks, shorten your workouts, or spend less time with family while you tackle a big project then do it! Just make sure that the quality of time you spend working out or with your family is high even though the hours may be limited. Trying to do everything and having balance will only mean that nothing gets done effectively. If your friends aren’t asking you where you’ve been on a fairly regular basis, you are not focused enough. The less (temporary) balance you have means the more you are committed to what’s important. If you want more on this idea, one of the best books I’ve read is The One Thing: The Surprising Simple Truth Behind Extraordinary Results. It will set you straight on finding balance!
- Keep your core expenses low. No matter what you do, keep your fixed expenses low. I know the new Mustang or Audi or whatever is amazing, but don’t even think about signing that lease. I know you want to move out of your parents’ house, but if you can hang out there a little longer (sorry parents!), do it. Month to month expenses are better than longer commitments. The idea is that you want to be as financially flexible as possible. The moment you have a car payment or apartment lease, your freedom is limited. You have to continue to work even though the job may not be a good fit. You won’t be able to take advantage of a new opportunity such as doing an unpaid internship with a great company. There will be plenty of time to be saddled with responsibilities, but when you are young, you want flexibility. Do this effectively, and you’ll have much nicer cars and houses in your future.
- Upgrade your friends. When I used to recommend this I’d get a lot of criticism, but because so many people recommend this now the advice is a bit passé. That’s okay. It’s still true and so few people follow through with it that it needs to be reinforced. You need to add new friends to your life. This may include dropping some of your more caustic friends for those who make you want to be a better person, who give you energy, and who support your big dreams. There are two types of people in this world, those who give you energy and help you grow and those who suck energy from you and make you weaker. It’s rather simple. It’s hard enough to be 20 something and to create an amazing life full of meaning, so don’t make it harder. Surround yourself with a group of friends who want to do big things and who challenge you to be the best you can be.
- Focus on your health and energy. Talk to anyone who has had a health problem and they will tell you life stops. The book they were working on, the degree they were getting, and the business they started all came to a screeching halt. When you don’t have energy or are in poor health, you can’t think creatively and you can’t get the work done. Yes you’re young and probably have lots of energy and can eat whatever you want and still feel good, but now is the time to develop good health habits. This means making exercise a priority and feeding yourself with things that will help you perform at your peak. Don’t neglect your health for a second. Your body and mind are your greatest asset. Make sure you are investing in them.
- Always be creating. My clients who have had the most financial/life success are those who have created something — a business, product, art, or cause. No matter how young you might be, it’s never too early to get into the creating game. In selling you often hear the advice of ABC – always be closing. I suggest you follow a different ABC – always be creating. Start a blog, create a video series, write a book, invent something, start a business, etc. It doesn’t really matter what you create; just create something. A passion project will give you energy and a reason to jump out of bed in the morning. It also gives you the experience of what it is like to sign the front of a check. Maybe you’ll go on and create the next great tech company or maybe you won’t. Either way you will take the lessons and skills into the future and you will be better off as a result.
- Use your other 8 hours wisely. The idea is that you work eight hours, sleep 8 hours, and have 8 hours left. In my book, The Other 8 Hours: Maximize Your Free Time to Create New Wealth & Purpose, I make the argument that life happens in those other 8 hours because the time you work you sell to somebody else and the time you sleep is not yours. The only way you can grow, exercise, develop a strong network, and improve your life is after work and before bed. Make the most of this time! It’s all you have to improve your life. Invest it wisely in things and people that will make you better. Don’t fall into the Uber trap. The Uber trap is spending your time thinking you are investing it. Yes you can make a few extra bucks, but that’s not going to improve your life. What if, instead, you invested that time in learning a new skill? The trap I see most often for young people is that they get locked into a car payment they can’t afford and then have to drive Uber or work some other part time job just to make the payments. Not only are they stuck with the car payment, they are forced to use their valuable time to pay for it. Value your time and invest it for the long-term.
- Stand out at work. I’ve always appreciated the quote from Jim Rohn, “Work harder on yourself than you do on your job,” but that doesn’t mean you shouldn’t give 100% at work. Be remarkable. Don’t blend. Be bold. Take on jobs that are difficult and that nobody wants. If you think playing it safe is the less risky approach, you are wrong. In the short-term it may be safer, but longer-term it is a disaster. You want to make sure you put yourself on the edge by taking risks at work. Stand up and speak your mind. Offer suggestions and pretend it is your company. The more you can develop an ownership mentality the bigger the difference you can make. Even if your boss is a jerk and doesn’t reward you, someone will notice. And even if nobody notices or cares, do it for yourself. At some point a new boss or new company will take note of your reputation or maybe you’ll have your own company.
- Change the way you think about your age. Don’t be insecure about your age (whatever it might be). You are never too young or too old to make a huge difference. That’s a self-inflicted limitation that has no basis in reality. Many others have created companies or even changed the world who were younger than you are today. Remember, you are the oldest you’ve ever been and the youngest you’ll ever be. Don’t limit yourself based on your age. Never say, “When I’m older I will be able to…” For inspiration, read about others who have done great things at young ages. It didn’t stop them and it shouldn’t stop you.
- Focus on your strengths. This is not new advice, but it’s still important to remember. Remember the earlier tip about forgetting about balance in your life? The same holds true here. If you try to be good at everything, you just might succeed. The problem is that good is not good enough. You need to be exceptional at something. The only way to do this is to first understand where you are remarkable. What is it that you do that seems effortless? Where do you find your energy? This doesn’t mean you should ignore your weaknesses – you should work hard to improve them – but it means you need to find the area(s) where you already have an edge and invest heavily there.
- Become aware of what drives you. The most successful and fulfilled clients I work with understand who they are and what drives them. Rather than get caught up in how others view them or trying to appease the wishes and demands of others, they know what they want. Evan Carmichael has developed an incredible tool to help you become aware of your core value. His book is called Your One Word: The Powerful Secret to Creating a Business and Life That Matter and it can help you get a clear sense of what’s most important to you by helping you identify just one word that defines you. This one word represents your core value and it can help you build a life, a business, and attract the people you want.
- Take responsibility for everything. Yes, everything. The good, the bad, and the ugly are all because of you. It’s nobody else’s fault. When you shift your thinking to accept that everything in your life is because of you, wonderful things will start to happen. No longer can you blame anyone or anything – that means it’s not your parents’ fault, the bad economy, or your boss. This also means that since it’s your responsibility, you get to fix it and make it better. You don’t have to rely on anyone else to give you permission. If you can truly accept (maybe even happily accept!) that your success and happiness is up to you, you will see the world differently. No more blame. No more excuses. Just acceptance, and with it, empowerment.
- Buy, invest, and create assets. If there is one thing I’ve learned from working with very affluent clients over the last two decades it is that real wealth is generated by owning assets. There are many ways to own assets. You can create them by starting a company, writing a song, producing a movie, or inventing a product. If you work for a salary this doesn’t mean you can’t become wealthy. It just means you need to divert some of your income into buying assets such as stocks, apartment buildings, municipal bonds, etc. Your income is the result of trading your time and value for dollars. Since time is capped, there is a limit on how much you can make. Regardless of how much you make an hour, you must get into the habit of converting your income into assets.
- Bonus tip: Have fun! Every single one of my older clients tell me that they wished they had more fun when they were younger. Yes, work hard, save, and invest, but don’t forget to have fun!
Which of these do you agree with the most? Which ones do you disagree with? What advice have I missed? Let me know in the comments…
I write about how to manage and make the most of financial transitions such as retirement, inheritance, and sudden wealth.
Robert is the owner of Pacifica Wealth, a fee-only fiduciary financial planning firm helping retirees, business owners, and sudden wealth recipients. Get his new book The Sudden Wealth Solution.