Once you get to a certain age, you are supposed to be wiser, right? While I’m not ready for the retirement home yet (I don’t think they would let me bring my three school-age kids), the fact is that I no longer have as many years ahead of me as I once did. I do have a little more wisdom than I did then, especially when it comes to financial strategy. It is too bad that we can’t go back in time, isn’t it and give my younger self some financial advice?
If I could go back in time, I would track down the earlier me and give her some of the following advice.
Invest as Much and As Early as You Can
Because of the fact of compound interest, the earlier you invest, the more your return. In fact, it takes very little cash to start a nest egg that will grow into the millions, if you start early. Forget socking your money away in a safe little checking account. Get that money to start working for you.
Don’t Be House Poor
There is absolutely no reason to take out a large mortgage and buy a house as soon as you can afford the debt. Instead, rent something cheap and start saving money toward a house. This way you can get as close as you can to paying for a house with cash, saving hundreds of thousands of dollars in interest over your lifetime.
Plan for Retirement as Soon as You Get Your First Job
When you get your first real job with an actual company, take advantage of the benefits, including retirement planning. Sign up for that 401K plan at the first available opportunity and max out the employer’s contributions. It is like free money.
Be Prepared with an Emergency Fund
You will find yourself having to deal with several emergencies, from needing a new furnace to a couple of uninsured visits to the emergency room. Reduce the financial impacts of these emergencies by establishing your emergency fund early and set it aside to be used only in an emergency.