A reader asked a question of me recently. The question was, “If you could go back in time to your early 20’s, what would you do differently to build a better financial safety net and grow your net worth faster?”
I thought it was a terrific question, so I’m putting it into a post today. Hindsight is 20/20, as they say, and having learned much about money and life over the last
25 years 2 years and 4 months, I can think of a number of things I’d do differently if I could go back to my early twenties and have a financial do over of my finances. Here are some thoughts:
1. I’d stop caring what people thought. So much of the financial mess we’re dealing with now is because we cared what people thought of our “status”. We wanted to be viewed as being successful, and we mistakenly thought that material possessions = success. If I could go back to my early 20’s, I’d dump that mindset ASAP instead of waiting till I was in my forties.
2. I’d have saved a set percentage of my income each paycheck. There’s a good book out there called The Wealthy Barber, Updated 3rd Edition: Everyone’s Commonsense Guide to Becoming Financially Independent . The book is full of great stories and financial wisdom, and I’d highly recommend it to personal finance aficionados, but the main takeaway of the book is that if one commits to saving 10% of their income from the get-go, that the savings results will be plush enough to cover all other financial errors – even a boatload of debt. Love the concept, and if I could go back in time, I’d commit to saving at least 10% of every paycheck no matter what.
3. I’d commit to living within my means and refuse credit card use. No amount of “stuff” is worth being saddled down with thousands in credit card debt. The peace of mind that comes with owing no man is unbeatable.
4. I’d put a minimum of 20% down on house purchases and pay for cars in cash. In other words, I’d leverage myself better so that if I was put in a situation where I needed to sell my house or car, there would be a net profit instead of a loss or a “come out even”.
5. I’d ramp up retirement savings. I’d contribute a minimum of 5% to retirement savings. Everyone can live on 5% less of their income, and the long-term results would be well worth the sacrifice.
6. I’d dump the broke mindset a lot earlier. I lived for years with a broke mindset. Now that I’ve traded that broke mindset in for an abundance mindset, I’ve opened the door to a wealth of blessings, financial and otherwise.
Friends, while these are all great ideas, we cannot for reals go back in time and have a financial do over. We can, however, take control of our finances TODAY and start implementing changes that will put us on the road to debt freedom and financial independence. So stop living in regret of past mistakes, and start building a better YOU today!