Financial Advice to My 20-Year-Old Self
Hindsight is 20/20. All of us can look back 20 years and say I should have done this or that. I believe everything in life happens for a reason and we are all exactly where we need to be, right here, in this present moment. We learn from past mistakes and modify behavior for a more positive outcome in the future. With that said, I will lay out basic financial advice I would give a 20-year-old just starting out in the real world.
1) Make relationships: Relationships with people = power. Whether personal or professional, you will attract more opportunities the more relationships you have. I do not mean, more friends. Friends are people you spend free time with, have coffee and gossip. More friends generally mean more distractions. True leaders have few friends but a massive number of relationships. The friends you do have, keep them close, treat them well and invest diligently into growing your relationship. Relationships where you are learning, leveraging networks, treating your customers with care and growing as a human being is what you want.
2) Stay out of debt: Debt keeps you a slave. No one wants to be a slave. Understand that if there are slaves, there has to be kings. You want to be a king. If you can't pay cash, do not buy it. There are exceptions but for most 20-year-olds, staying out of debt is a great place to start.
3) Consider becoming an entrepreneur: Being your own boss is not for everyone but for those willing to make the sacrifice, it will be well worth it. There is nothing wrong with working for a company either. Both have pros and cons. I do believe however more people should consider becoming an entrepreneur.
4) Start investing and deploying your asset army as soon as possible: The power of compounding is crazy powerful. Start early and watch the momentum build. Too many people start investing in their late 30's, early 40's because they were buried in debt. Investing in your late teens/early 20's will reward you at epic proportions.
5) Keep all options open, and an open mind: Most people learn from their parents and public schools. As a result, their scope of vision and outlook on life is severely limited. (in most cases, not all) This is why you see generations that all follow in the footsteps of their parents and local community. Think bigger, travel, get friends from out of your local community, take risks, be the black sheep.
6) Understand there is one big pool of money circulating everyday (the economy), find out how you are going to get your slice: It's your money or their money. Imagine 5 trillion dollars in a bucket and 7 billion people standing on the edge of the bucket. All you have to do is dip your hand in and pull the money out. But in order to earn this privilege, you have to provide value. Learn to provide value and you will be rewarded with more opportunity to pull money out of the bucket.
7) Money = more options = more freedom = happiness BUT more money does not directly equal more happiness IF options are limited: Just because you make 350k/year does not mean you have options. In many cases it may mean you are strapped to a desk 60 hours a week, 40lbs overweight, with a cheating wife at home and kids that dislike you. More money leveraged correctly will give you more options. (we call this optionality). More options always equal more freedom. Freedom (spent in positive ways) does equal happiness.
8) Only commit to a relationship if you both have a similar financial mindset: If your spouse is drilling holes in the financial bucket as you are filling with a hose, you need a new spouse. Find someone you are on the same page with financially and enjoy getting rich together. On the contrary, if financial freedom is not important to either of you, kudos, you found your match.
9) Talk with as many people as possible richer than you, ask open ended questions, listen and shut up: Mentors are free education. Find them and learn from them. Admit you don't have all the answers. Ask them to help you, ask them to meet their friends, do not be shy.
10) Track your net worth once a year with our Betternance Scorecard: As a 20-year-old you are most likely not in a strong financial position. That's normal. Tracking your net worth holds you accountable to your financial growth or decline. Do this annually. Positive momemtum will lead to more motivation. Negative results will lead to you learning why and not making the same mistakes.
Share this article with a 20-year-old who you think can benefit from this advice.
Onwards.