Hey everyone! Have you ever thought about what you would say to your younger self about money? Today, Chris Peach from moneypeach.com is dropping some financial wisdom on his past self. He has a great site – go check it out after you read the post and share your thoughts! ~ M$M
I think I am a Millennial. I was born in 1983, I love Chipotle, I have two pairs of TOMS, I know where the nearest Wi-Fi spot is, and even have a selfie stick. With that said, I also know that I am right on the edge of being a less-hip Gen Xer.
Since I wasn’t quite sure where I fall into place, I wanted to still go back and give my younger self some of the best money advice I wish I would have received when I was a young Millennial (or Gen Xer). This is the letter I wrote to my younger (and dumber) self.
Do these 6 things now and I will buy you a beer on our trip to the Galapagos Islands when you are 32.
Don’t Pay $7,000 for a T-Shirt
You went to Arizona State University and you were offered a free Sun Devil T-Shirt on your first day. The only thing you had to do was sign up for this sweet new ASU Credit Card. The card even had the Sun Devil logo on it so when you used it, people would know your heart belonged to the maroon and gold (ASU’s colors)! Remember that ah-mazing feeling?! Ah yes…stupidity at it’s finest.
Fast forward 10 years and you’re going to be the owner of $7k credit card balance at 22.99%. Also, the free shirt ended up becoming a rag for your roommate’s girlfriend who threw up in your car. The point is, stay away from credit cards and stay away from debt. Yes, you’re going to have to give up those precious points and airline miles. But, until you meet a millionaire that says, “The secret of my success was those free points and airline miles” you may as well pay with this green paper stuff they call……money.
Build Wealth Now
You’re young and keep telling yourself that retirement is so far away so you will invest later. Guess what? Retirement is no longer an age for people, especially Millennials. Pensions are drying up and Social Security is turning into a giant joke. Since both of these things are age dependent, then you can see why I am telling you retirement is not an age, it’s a number.
Start investing in yourself now and put retirement on your terms – not the government’s or your employer’s. That is a stupid plan. Also, do you know how much easier it is to build wealth when you start NOW versus starting later?
I sure wish I would have saw the Ben vs Arthur example when I was 18 instead of 28. Open up a ROTH, max it out every year, and you’re older self will be traveling the world, sipping the finest craft beer, and doing whatever you want. It’s almost cheating if you start early – almost.
Get Life Insurance ASAP
If someone tells you to hold off on purchasing life insurance because you’re only in your twenties, then that person is an idiot. Everyone needs life insurance, because everyone has a chance of dying. “But, I don’t have a family or anyone that depends on me”.
This is true, but what if something happens to you now? I have a friend that was diagnosed with Multiple Sclerosis when she was 27 and there isn’t a life insurance company that would take a 2 second look at her now.
Luckily, someone told her to get Term Life Insurance when she was 23 years old, and now she is insured for $700k until she turns 48. She also has a hubby and 2 kids and knows they are going to be taken care if something happens to her. Term life insurance rates are ridiculously low right now. Don’t wait another second, get it now.
Drive a Crappy Car
Brand new cars lose 11% of their value from the time you leave the dealership and get in your driveway. The next 4 years, they lose a total of 60% – 70% of their value. If you buy a brand new $31k car, it is going to only be worth $11k in four years and chances are you financed it for five to six years.
This level of deprecation for a piece of metal to impress a stranger at a stop light is equivalent to driving around once a week, rolling down your window, and throwing out a $100 bill. Let someone else take the depreciation and you go out and buy a 4 year or older car. Don’t talk yourself out of it by saying “older cars always break down”.
I promise you there won’t be $100/week fixes for the first 4 years. I’m debt free now, have a much higher net worth than I did at 22, and I drive a piece of crap even when I no longer have to. It’s not because I am cheap (maybe a little) but I would rather put my money in stuff that goes up in value than something that plummets like a lead turd in an outhouse.
Buying a new car with a giant car payment versus buying older cars with cash will be one of the biggest separators between you being wealthy or not. This one is simple – do it.
Rent (Because You’re Broke)
Renting is not evil, it’s not stupid, and it’s not going to cause you to go to hell. Renting is a smart move if you’re just starting off your life. When something breaks and you’re renting, you call the maintenance guy and it’s fixed.
When something breaks in your house, you usually shell out $1,000. Give yourself a few years to build up some savings for a down payment, figure out where you want to live, and enjoy the freedom of renting. Just remember that renting is not supposed to be a forever thing.
It’s just there to get you over the hump in life and to keep you out of foreclosure (you spent some time there when you were 27).
Give your money, give your time, and give your everything. The most memorable times I have had in my life aren’t the vacations I took or the stuff I bought. It’s the times where I was able to make a difference in someone else’s life because I gave. I wish I would have done more of it.
Understand that you don’t need to give away your life savings. It can be as simple as buying a cup of coffee for the stranger behind you in the line at Fourbucks Starbucks or leaving a $100 tip on a $10 lunch to the pregnant waitress.
Take a less fortunate kid to a college football game or take an inner city teenage girl on a one day shopping spree to the mall. If you need some inspiration, visit I Like Giving.
If you could do this 6 things anytime soon, you’re going to make me look like a Financial Rockstar! You may be faster, stronger, and better-looking than me, but I promise you I am smarter. Way smarter.
See you in the future,