I was on the treadmill at my college gym when I watched the Dow Industrial drop. The market was collapsing before my very eyes nearly a year before graduation. Over the past few years, I had racked of tens of thousands of dollars of debt to pay for Studio Art degree, a study abroad trip (worth it), and plenty of high tech gear to support my digital art studies. In my early 20’s, I made a bunch of financial mistakes that I wish I could take back. Here are my top five:
1. Taking on Student Debt with No Direction
Before applying for colleges, my parents gave me an out. They actually said, “it’s okay to take a year off if you don’t know what you want to do yet.” I went to a private college prep high school though, so skipping college was not an option… Or so I thought. I fell in love with a small campus, the idea of college life, and the first taste of independence. Little did I know, I was racking up tens of thousands of dollars of debt that would shackle me down for years.
I am glad that I went to a state school. It could have been way worse. At 18, I had no idea how these loans would effect my early financial life. I have yet to use my college education in my professional career. Thanks to an internship, I landed my first job before graduating. Unfortunately, my student loan debt payments made up 1/4 of my monthly salary. This leads me into mistake #2…
2. Not Investing in the Market Earlier
You know what stings? Looking back at the prices of Netflix and Amazon back in 2009 and 2010 and realizing that you spent that money on student loan payments instead of investing. Rather than taking advantage of a down market, I was paying for an education that I didn’t use.
Skipping out on the market also mean that I missed out on my company 401k match. This missed opportunity is worth a few hundred thousand dollars now.
3. Spending Too Much Money on a Car
I grew up believing that wise money managers bought cars, and fools leased them. No matter where you fall on the lease vs buy argument, a $7500 down payment and $250/month car payment when you’re only making a couple thousand a month is not a great idea. In order to buy a car I thought was cool, I drained my savings and made monthly payments for the next 6 years.
While the monthly payment didn’t hurt as much as my net income grew, it still hurt my ability to stash away cash or invest it earlier. It became a contributing factor to my #2 mistake. The better decision would have been the less cool car that was half the cost.
4. Enjoying Too Many Experiences
From craft beer to concerts, I played into the millennial stereotype that we like to spend money on experiences over stuff. The little disposable income that I did have was spent on plenty of weekend fun. As I’ve grown older, one of the truest things that I’ve learned is that some of the best experiences have been the simple and free ones. A fun Friday night would cost $75-$100 a week. Oh wait… There’s my investment money!
While splurging from time to time is necessary, shelling out cash for the weekend wasn’t sustainable or a wise use of my hard earned money.
5. Not Giving Away More Money or Time
Wow. There are four things that I wish I had done to save and make more money, but the biggest regret is not giving away more money or time. While I wasn’t managing my money wisely, I was extremely blessed to have a job so soon after the market fell collapsed. One of the best things that I could have done in my early 20s is give away more money and dedicate more time to those in need.
Part of the wise money life that is rarely discussed is figuring out how to make more money so that you can give more away. If you can adopt that mindset, you will be truly successful.
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