If I had an opportunity to offer advice related to money to my younger self, I would have engaged with money matters sooner, and made money my friend. I made three fundamental mistakes and I plan to teach my daughter with my examples so she creates a healthier financial path:
- Understand the context of the financial system
- Don’t cash out your 401(k), ever
- Create a budget focusing on giving, saving, spending according to your values
I can’t remember a time in life when I did not work in some capacity. I even managed to save $5,000 during high school to use toward college. I had no idea how quickly that $5,000 would be used! I managed to muddle through college and started using my first credit card, all the while not really understanding how the financial system worked, until I started my first job at a bank. Knowing what I do know now, having context on the broader financial system would have saved me much confusion in my younger years.
When I moved from New Orleans to North Carolina, I made the mistake so many younger professionals make – I cashed out my 401(k) to pay for moving related expenses. I know, I know – not bright, but at the time, retirement seemed so far way and my need for a washer/dryer and new furniture so real!
Finally, it was my third job after college that I developed a budget for expenses and spending. Through the years it has evolved tremendously as my finances have gotten more complex. I have evolved it from a spending budget, to a savings budget, to now include the plan for giving to nonprofits that are important to my family. I hope to have it in terrific shape to send with my daughter as she goes to college in nine years – hoping that the financial evolution will continue to improve through the generations.
What advice would you give your younger self about money?