Hey everyone! Today I've got a great guest post by Ms. Montana about the choices we can make with our money while we're young. This one is PERFECT for anyone out there hustling and dealing with haters at the same time. 🙂 Enjoy! ~M$M
We married young, deeply in love, and buried in 50k of debt. Credit card debt, medical bills, student loans. We wanted to get out of that debt as fast as possible! But we had other big dreams too. Travel, a home, kids (adopted and bio), and most of all, financial freedom.
We didn’t have a lot going for us with low earning degrees. But we had the most important and powerful element. We were young!
Criticism is cheap and easy. People will look down on all the little sacrifices and hustles that others are doing. They think it won’t amount to anything significant. We heard a lot of that in our early 20’s. When we always packed our lunch with left overs. When Monday was rice and bean day. When we took extremely frugal vacations, where breakfast was instant oatmeal and lunch microwave popcorn, both prepared at the morning gas station stop.
We were married with our first son and had a roommate! We drove a used Honda civic. (and 12 years later STILL own it!) While all my friends were starting to buy nice outfits for their new corporate jobs, I was wearing things from 5 years ago.
It’s easy to look down on these little things because they don’t seem like they will ever add up to anything. But…
Your money will never be more powerful than when you are young. There are 3 ways to look at this. Let all three give you the confidence to silence the haters, and step up your game to new levels.
1. Powerful Money
Maxing out your 401k with $18,000 is an impressive feat. But what if your $1,800 was just as powerful as $18,000? If you can save $1,800 at 22, it will grow to $18,000 when you are 52 (adjusted for inflation). So a 52-year-old has to contribute their full match just to equal your $1,800.
That dollar you have is no ordinary dollar.
Invested it’s 10x as powerful as the 52-year old's dollar. If your extra investments dollars don’t look life changing now, remember the compound interest power they have.
2. Powerful Side-Hustle
Even in our rural Montana area, I pay $12 an hour for a sitter (I do have 5 little kids! So it’s money well earned). What if your side hustle earns $12 an hour and you put in a whopping 3 hours a week? That is the same as the 52-year-olds $18,000 401k contribution. How is that for a powerful side hustle?! And let’s be real, how many 52-year-olds can make 18k working 3 hours a week?
So how could you earn an extra $36 a week? When every $36 a week investment buys you a year of full retirement savings in your 50’s, maybe it will seem more significant.
Don’t let someone poo-poo your weekend dog walking gig or lawn mowing side business. When they are 52 and making huge sacrifices to find that 18k to invest, you can just smile as you fondly remember what great shape you were in from pushing a lawn mower 30 years ago.
3. Powerful Choices
We tried to cut our expenses as low as possible so we could jump start our savings. No other married folks wanted to have a roommate, but in the DC area, it put an extra $800 in our pocket every single month. That one choice super charged our savings. We could max out our Roth IRA’s and managed to save a lot in investments.
7 years later, we were able to pay cash for our house.
When our friends wanted to get ahead in their finances, I would suggest getting a roommate like we had. But all we would hear were things like this: “We really just like it being the 2 of us. We have had roommates for too long. Our rent actually isn’t that bad. I’m not sure it would make much of a difference.”
You know what we hear now? “You guys are SO lucky! I can’t even imagine not having a mortgage. With no debt or payments, what do you even need to spend money on! I would love to not have our huge mortgage. I can’t believe you guys get to take a year off from working, who does that?!”
If you really understand how powerful your money, income, and spending are in your 20’s, YOU could do that. You could be the one that is mortgage free. You could be the one taking a year off work. You could be the one with more choices, more freedom, and more options.
Unless you spend it. Then that dollar will have the exact same power and potential as anyone else’s.
Find your $36 a week. And buy off year after year of future 401k contribution. Your money is never more powerful than when you are young.
Ms. Montana writes and speaks on personal finance topics. Creating a life filled with financial freedom, adventure, and generous living is her passion. She lives in the beautiful Flathead Valley in Montana with her husband, 5 kids, 7 ducks and a dog named cheesy taco. They are currently taking a year long sabbatical filled with hiking, traveling, classes, home renovation, and naps.