Finance Advice I Wish I Gave Myself in My 30's
Having learned from the money mistakes I made in my 20’s, it’s time to reflect back on the next decade in life.
Along with getting older comes new milestones, responsibilities, opportunities and choices. As with most people, when it comes to financial choices, I made some good decisions and some bad decisions.
If I could turn back time, this is the financial advice I wish I gave myself that would have the biggest impact on my savings, net worth and overall quality of life.
1. Know the Full Cost of Home Ownership
One of my important life goals was to buy an actual house. Growing up in a single-wide trailer, for me, home ownership was a sign of success, even a luxury.
Entering my 30’s, I had been renting from a family, and was told that their son would be coming home, so I had to find a different place to live. I’d already moved a few times, and I was tired of paying rent money each month and not having anything to show for it when I had to move again. So, I decided to look into houses for sale, not even sure if I could qualify for a mortgage.
Interest rates were extremely low, and I thought, it’s now or never. I spent hours scrolling through listings on real estate sites like Zillow and Trulia. I remember using the mortgage payment calculators and the look of astonishment on my face, saying to myself “How can the payment on a house be less than what I pay for rent?! This can’t be right…”
So, I went to a local real estate office with a list of questions, and sure enough, the estimates were true. I got an agent, and since I was pressed for time before I had to move, we went to see 5 or 6 house listings a day before I saw them all.
I submitted an offer on a house, got a call that the sellers accepted my offer, and was so excited! I did it! I’m going to be a home owner!
Little did I know that the cost of owning a house is far more than just the mortgage payment itself.
After adding in the cost of homeowner’s insurance and property taxes, my monthly payment was already more than my prior rent payment.
Then there’s the utility bills. When I rented, it was all included, so it was shocking to see just how much it cost me each month in electricity, gas and water.
I also didn’t factor in the price of repairs, maintenance, updates, furnishings, appliances…the list goes on.
I soon discovered that buying a house is a big decision that I had not fully prepared for, and I certainly wasn’t ready from a financial standpoint.
I still have the house, and proud to be a home owner, but if I knew then what I know now, I definitely would have done things differently. I would have taken more time to get my financials in order. I would have done my research on taxes, utilities, maintenance, and talked with other home owners. I also wouldn’t have rushed into it, and waited until I could make an informed decision on a house I was 100% happy and confident with.
2. Cars Don't Make You Cool
When I turned 30 years old, I had what I like to call my “pre-mid-life” crisis.
I don’t know exactly what happened, but one day the thought came into my head that I needed a fast, expensive muscle car. It might have been part of my subconscious of how I viewed success, that it would give the appearance of success, or maybe I just wanted to live life a little closer on the edge. Regardless, once it was in my head, I couldn’t get it out, and needed that car.
I found the exact one I was looking for, in red, with racing stripes. I called the dealership to make sure it was still in stock, and told them I’d be there as soon as I could. They knew they had a sale before I even walked in the door, and the salesman came running to me, shaking my credit report in his hand with the biggest smile on his face “A+ credit!”
I then left the dealership with the biggest smile on my face. Ahhh, that new car smell. That rumble of the exhaust…the power…I couldn’t wait to “show off” to my friends.
Of course, that new car owner joy doesn’t last forever, and a few years later I traded it in for the newest version. More horsepower? Bigger tires? Better sound system? Yes. Yes. Yes.
Now, after 10 years of car payments, what did I learn? That sure was a lot of money.
Expensive payments, higher insurance premiums, higher maintenance costs…and since I live in a snowy climate, I can’t even drive it half of the year, so I had to buy a second car for the winter months!
I can look back now and ask, was it fun to own? Yes.
Was it worth it? Absolutely not.
Honestly, there was no additional value, or change in my life, from purchasing the expensive car than I would have had if I only purchased my “back-up” car.
The only real difference is I had no money to do anything else with, because I was sinking it into that car. If I invested that monthly car payment instead of purchasing the car, based on the average stock market return over 10 years, I would have saved $100,000.
So, which is better? Which is cooler? To have a nice car and struggle making payments, or to have $100,000 saved in the bank?
I wish my younger self knew the answer to this.
3. Track Your Income and Spending - Learn to Budget!
Ever have that embarrassing moment when you check out at the cash register, swipe your card, and the screen shows declined? The clerk looks up, you shift your eyes to the side and start mumbling “Hmm. Declined? There must be something wrong. It should be working…” while trying to think of what to do next.
I’m not too proud to say it’s happened to me.
The added costs of home ownership and multi-car ownership meant I really had to keep an eye on my finances. The problem was, I didn’t do that. Sure I knew when I got paid, but I was also paid bi-weekly, and sometimes the bills come in before the paycheck.
I got into the habit of buying when I got paid, thinking there’s money in my account now, so there’s nothing to worry about, and not considering what bills I’d have to pay before my next paycheck.
Having a better understanding of my budget, income and expenses, would have gone a long ways towards making sure I stayed on top of my finances, learn where I could cut expenses, and not spend when I couldn’t afford it.
Learning how to put budgeting into daily practice is something I should have learned much sooner in life.
4. It's Dumb not to have a Smartphone
To say I was a late adopter to having a smartphone is an understatement. I’m old school in some ways, and I would just see young people with their noses buried in their phone, and think, no thanks…calls and text is good enough for me. I didn’t make the switch to having a smartphone until just a few years ago.
At the time, I didn’t realize the money saving and making opportunities with apps. I mean, I was still paying for a standalone GPS and updated maps in my car, which that alone would have saved me money using Google Maps or Waze.
I did a lot of research and went with cell phone service from Google Fi, and my monthly payment is less than what I was paying for my “dumb” phone.
Then I discovered apps for my bank and credit cards, and if I had the convenience of seeing my balances on my phone wherever I went, it definitely would have prevented some unnecessary purchases.
I save between $5 and $25 each week just on groceries alone with Ibotta, and they’ve expanded their cash back rewards to many local and online retailers as well.
There’s lots of financial pros with smartphones, and small changes can have big results over time. I look back now and think of all the money I wasted when not taking advantage of rewards apps, just because I was stubborn.
5. Don't Invest in Stocks without Proper Research
Trends come and go, and the same can be said in the financial sector.
I remember when solar panels were all the rage, and there were lots of start-up companies to capitalize on the market and the green energy tax advantages.
I heard of a fledgling company who was developing a new type of solar panel technology to acquire a government contract. I thought, if this goes through, it could have massive potential!
So I went all in, investing in the stock, not knowing anything else about the company. It was also my first time purchasing an individual stock.
They did get the contract, and soon after it was announced, the stock went up 25%, and I was feeling like the smartest man in the world, saying to myself, just imagine how much higher it can go.
I left my money in the stock, expecting a huge return, then after the earnings report came out, it was all negative and the stock started plummeting. Over the next months, it continued to go down, the company did a couple reverse stock splits further devaluing the individual stock price, and eventually it got de-listed from the stock market. The company went bankrupt and out of business.
I was devastated, but in reality, I was also stupid. I invested in a stock on a hope.
I should have done my research on the history of the stock, how long the company had been in business, who was running the company, what is their prospectus, short term and long term plans. I should have compared it to their competitors. I should have looked at the numbers, what is the earnings per share, what is the outlook from financial advisers, what is the revenue and profit margin? So many questions and I had none of the answers.
My advice to my younger self would be:
1. Don’t invest in a stock unless you can afford to lose it all
2. Don’t invest without having full knowledge of what you’re investing in, and only invest in what you believe in and support.
6. Get Out of Your Comfort Zone
We are creatures of habit, and I’m no exception.
I get settled into something, and each day goes by as the status quo.
This is how it was with my career. I worked 2 jobs, was very good at what I did, and completely comfortable knowing exactly what I’d be doing each day. But staying where I was, there was no growth potential, and it wasn’t a challenge. I had been in the same job position for 7 years, making roughly the same pay.
The only way this was going to change is if I stepped out of my daily comfort zone routine, and started betting on myself.
I applied for a couple different jobs, and got accepted for one of them. I started as a trainee, and learned new things every day, working as hard as I could to prove myself. Since then, I’ve received a couple of promotions, and my salary is 50% more than it was 5 years ago.
You don’t get what you don’t ask for, and now I know that for the first half of my 30’s, I was settling rather than seeking, and I should have stepped out of my comfort zone years before.
The quickest way to improve your finances is to make more money. Try and apply for new and better opportunities.