I sometimes wonder what it would be like if my 40-something self talked to my 18-year-old self. I think I’d tell my younger self, Congratulations, you didn’t totally screw up!
I say this because I’ve always feared failure. Some people are afraid of heights or public speaking; I was always motivated by fear that I’d fail at important things. Fortunately, life has been pretty good to me, and I’m grateful for that. I have a happy marriage, three healthy children, a job I love, and a nice house to live in. We eat well and save well, take vacations every year, and soon we’ll be debt free.
Does that mean I’ve done everything right? Hardly. On the contrary, I’ve made more than my share of mistakes on this journey called life than I care to admit, including plenty of financial ones.
But that’s life. We make mistakes and (hopefully) learn from them.
Still, it doesn’t mean you have to make my mistakes. I won’t claim to have all the answers, but here’s some financial takeaways I’d share with my younger self.
1. Take Out Smaller Student Loans
In case you didn’t know, the whole student loan business is a mess. Like most people, I learned the hard way that loading up on student loans is great during college, but paying them off isn’t nearly as fun. Sure, I needed the money. College is expensive. But I often took out more than I needed.
“You got a good interest rate,” a friend told me. “You can just invest what you don’t spend, and you’ll earn more on the interest than you’ll pay on your loan.”
Maybe this advice was good or maybe not. We’ll never know because I didn’t invest a penny of it (more on that later). But I did manage to go on Spring Break every year and probably spent a lot more money than I otherwise would have.
2. Always Have a Job in College
Except for my freshman year as an undergrad, I was pretty good about working lots of hours while I was in school. It helped that I liked my job and that I worked with my friends. Graduate school was a different matter. Apart from my teaching assistant position, which didn’t require much work, I never had a job. I didn’t think I needed one because a lot of my school was paid for, and this would allow me to study even more.
This was a bad decision on my part.
I would tell my younger self not to pass up an opportunity to have a steady income, even if it’s a small amount. There are plenty of jobs out there that will allow you to study and make some money. Your job, whatever you choose, is likely to offer you some good experience and will keep you productive, in addition to the money you get from it.
3. Invest Every Year
Investing is important. Yes, it’s about making money—but there’s no guarantee that will happen. But it’s not just about money. It’s also about developing discipline and accruing knowledge. Investing will teach you how markets work and get you thinking about your long term future.
So I’d tell my younger self to start investing right away, even if it’s a very small amount of your income.
Maybe you’ll make money, maybe not. But you’ll definitely learn a lot—the discipline to hold; the cost of rash decisions; how to trade options on the fly. You’ll get to experience bear markets and bull markets before you’re heavily invested. This will prepare you for financial cycles—booms and busts—which may tempt you to dump your holdings in a bear market or jump into an overbought market because of FOMO.
4. Don’t ‘Buy the Dip’ in a Bear Market
Speaking of investing, you’ll sometimes hear an expression: buy the dip. This is a simple and common investment tactic. Instead of buying stocks at their peak, buy them in the valley, the thinking goes.
It seems simple, just like “buy low, sell high.”
Buying the dip can be a great strategy in a bull market if you know what you’re doing, but buying the dip in a bear market is a disastrous one. Don’t assume that buying a stock at $50 is a good deal because you love the company and it was selling at $100 last week, or $150 two weeks ago. All fundamentals aside—and you should know the fundamentals of a company if you’re looking to purchase shares—if you’re in a bear market, that stock could just as easily hit $10 before $150, as many traders saw the last couple of years.
You might have thought you were getting a steal buying Zoom shares during the valleys in 2021, when they dipped to $295, $255, and $183; after all, the stock was trading at $560 in October 2020, and the company has a bright future. The problem was the stock market was entering a bear cycle, and Zoom—just like hundreds of other growth stocks—just kept sliding once it became clear the Federal Reserve was going to begin raising interest rates. Today, Zoom is trading at about $61 a share.
A better strategy than “buying the dip” with big bets is to average-in on companies over time once you’ve done your due diligence.
5. Attack High-Interest Debt
One of the first things I got after landing my first real job was a credit card. I used it for almost everything I bought, but I always paid the balance at the end of the month. That meant I didn’t have to pay interest on my balance, which is good because credit cards have really high interest rates. (The average interest rate on a credit card is 22 percent in 2023, according to Wallet Hub. That’s high.)
That doesn’t mean I didn’t run up debt in other places. There were car payments and, as mentioned, student loans. I’d tell myself to not be shy about attacking debt, especially if the interest rate is relatively high. In fact, attack it aggressively and start with the debt with the highest interest rate first.
I messed this up in my twenties. My student loan payments seemed too high when I was done with all my school. Instead of tightening my belt, I adjusted my payment plan, lowering my monthly payment from $450 to $250. This was a terrible idea, and it cost me lots of money in the long run. (I could have simply golfed a bit less and stayed out of bars a little more.)
Later in life I made a similar mistake. While we took advantage of those low interest rates in 2020 and refinanced the mortgage (2.62 percent, baby!), I should have attacked other debts harder. So when you have an opportunity to pay off debt with marginally high interest rates, do it.
6. Drink Less, especially in Bars
This might sound moralizing, but it’s not. I like bars, at least I used to. And I still like a good drink on occasion—beer, wine, whiskey, you name it.
When I say drink less in bars, I’m speaking in a strictly financial sense here (though there are certainly other good reasons to avoid bars). You can spend a lot of money in bars, especially if you like to drink.
I won’t tell you to stop drinking, lest I make myself a hypocrite, but that’s the top advice of Iman Gadzhi, the millionaire YouTube sensation in his recently published video “7 Money Tips For Teenagers To Make $1 Million,” which already has more than two million views.
“The first step if you want to become a millionaire is stop drinking,” says Gadzhi.
You can see for yourself the reasons Gadzhi offers this advice. And while I won’t endorse his abstemious view, I would definitely tell my younger self to drink less and spend less time in bars if you’re serious about building a sound financial future.
This article was adapted from an issue of the FEE Daily email newsletter. Click here to sign up and get free-market news and analysis like this in your inbox every weekday.