Lessons About Money From Our Twenties

From Reddit: A thread on the most important financial lesson various people have learned in their twenties.

Many of the lessons are pretty straightforward, according to the ones with the highest votes:

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Yes, indeed!

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And then there’s the “don’t let the government garnish your wages” lesson:

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And this is a specific lesson to specific individuals but if you are that individual it can be a rough realization:

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If you’re less inclined to wade through the hundreds of comments in the thread and want to read more of a narrative, here’s an essay by S.L. Bathgate that was one of the first essays we published here.

As for me, after considering it for a bit, it could have been something like start saving for retirement earlier at 21, instead of at 25. But then again, it wasn’t feasible for me until then, and with so many households with no retirement savings, starting those savings at all is a win.

No, the true lesson for me is that I wished I had initiated more conversations about money with the people in my life—with people in my family, with my friends, with the people I work with—because you glean the most information about money that way in a that’s most specific to you. Suze Orman probably doesn’t know what you should be making at work, but you can get that sense by talking with a few trusted colleagues about it. Your friends may know a great tax person, or what an index fund is, or maybe they don’t, but talking about it gets this kind of information out there. At the very least, they’ll know that hey, maybe you can’t afford to split the dinner bill evenly and you only ordered the soup because that’s all you could afford to pay.

What about you?

 

*Thanks to Tamar for the link!

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20 Comments / Post A Comment

OllyOlly (#669)

LOL at don’t buy a timeshare. My parents own some and it continues to baffle me since I find they are generally rather smart people.

andnowlights (#2,902)

@OllyOlly Oh this. My dad, who’s in WEALTH MANAGEMENT, bought partial ownership in a condo last year and I want to bang my head against the wall every time I think about it. Such a stupid, stupid thing that I’m going to have to sell off for pennies on the dollar when they die (not for a long time!) because I refuse to play that game.

Allison (#4,509)

@andnowlights maybe they will actually get value out of it while they’re alive!

@OllyOlly My parents bought some also and it turned out ok. It’s the only way my mom can force my dad to take some time off. She just mentions how it’s a waste of money if they don’t go on vacation and he schedules a week off.

mintjulips (#6,277)

@OllyOlly NEVER BUY TIMESHARES! They won’t go away, even after you die, and they will suck thousands of dollars out of you (even after you die).

Worgchef (#6,838)

For me it was definitely the “save early” bit. Fidelity produced some chart that showed someone who saved from 20 to 30 years old and then quit saving. They then compared it to someone who started saving at 30 and continued to save until retirement at 65. The latter person never caught up.

Looking back, there’s plenty of fuzzy math and assumptions, but it was a powerful thing to see.

ETA: same story here http://money.cnn.com/retirement/guide/basics_basics.moneymag/

honey cowl (#1,510)

@Worgchef That sounds like such a great idea in theory, but when you’re 20-30 (at least in my household) you have stupidly low-paying jobs. Then you read that and you get all depressed because even IF you get a super-awesome job AND save more for retirement in the next 5 years, you’re fucked.

ThatJenn (#916)

(1) Don’t feel guilty about advantages you have. Nearly every opportunity anyone has is because of some unique advantage or connection they happened to have at the right time. Use those advantages carefully and to live a life aligned with your principles. (This isn’t just money-related, though it has been at least in part for me – my family’s inheritance paid off the credit card debt I had from my first marriage, helped me save my house, and helped me qualify for a car loan, and I felt endlessly guilty about that until I considered all the ways I could build a more stable future without that debt hanging over my head and really took to heart my mother’s note that they earned that money so that their family could have a better, easier life. Now I just feel very lucky, and obligated to use the stability to build something useful for myself – a more helpful perspective.)

(2) While at least one of my parents DOES know shit about money, she also doesn’t always know what’s best for me. She’s given me a lot of wisdom to think over, but it’s all from the perspective of someone who is very financially comfortable now. “It’s just $100″ is a reasonable thing for her to say but it isn’t always for me. She’s been great about reminding me that debt can be a very useful tool if you borrowed for the right reasons and at a reasonable interest rate (the perspective of “you are paying a few hundred dollars in interest for the privilege of having a car that won’t break down constantly several years before you otherwise could”), but also I have to consider my own comfort levels with debt and my own habits.

I feel good about my financial situation right now (three months ’til my 30th birthday), but I haven’t always seen this stability in the cards!

therealjaygatsby (#4,053)

That parent comment. I had the same realization earlier this year, and boy, was it a punch to the stomach. (They are very good at hiding or, more often, ignoring financial issues.) Honestly, I don’t know where I’d be in terms of personal finance without the internet.

cmcm (#267)

1. How bad is it that I’m 30 and have no retirement savings??

2. How bad is it that it doesn’t bother me, because the thought of retiring is actually unappealing?

Allison (#4,509)

@cmcm you do you, but I’d keep in mind that retiring isn’t always a choice, so unless you plan to just end it all if your ability to earn a living is hampered in some way it might be a good idea to have some sort of contingency.

garysixpack (#4,263)

@cmcm
Also, keep in mind that 30-year-old you is not going to be the same guy as 50-year-old you. Retirement may be unappealing now, but it may not always be.

I remember I didn’t put money in my 401k in my early 20′s, because I honestly didn’t think I would (and would want to) live to 65. Boy, I was an idiot.

@cmcm That’s the problem with retirement savings- there is no way to know for sure what your needs/desires will be in thirty or so years. Like Allison said, it’s way better to have a cushion and continue working than to not be able to work for whatever reason and have nothing stored away. I’m also thirty and nowhere near where I should be in terms of savings, if that makes you feel any better.

cmcm (#267)

@TrotskyHoldsMyiPod Ugh. I *know* that all of these things are true, but I’m currently a part time PhD student paying my own tuition by working part time and running a business whilst also trying to pay off my student loans from undergrad and my masters… Soooo… retirement savings isn’t an option anyway.

chic noir (#713)

@cmcm – What are you doing your PhD on if you don’t mind my asking. Either way good luck.

cmcm (#267)

@cmcm Political Science.

Tax Token (#6,772)

Learning how to talk about money with my partner was a big one for me. Uncomfortable at times, but so important!

beastlyburden (#6,122)

1) A lot of the time, people are just trying to keep up with each other’s spending and lifestyles. Don’t feel ashamed or weird if you can’t or don’t want to keep up with the Joneses.

2) Corollary to the above, your real friends will still want to hang out with you even if you can’t afford fancy cocktails out.

3) The earlier you get into the habit of saving, the less of a big deal it is.

4) You can’t always afford the dollar price of something, but you can usually afford to be generous in other ways, so be generous to yourself and others.

5) We’re all still young and figuring it out! Everyone makes financial missteps; there’s no such thing as a financially perfect life.

6) But seriously, start saving as soon as you can.

potatopotato (#5,255)

It’s not so bad to be seen as The Poor Friend, because then your friends will be less likely to suggest super expensive outings.

ceereelyo (#3,552)

I wish I had saved more. I had a fun 20s, and got to do a fair amount, but I have not yet broken out completely from the cycle of credit card debt I carried throughout my 20s (got out of that but have run up some cards again in the past two years due to wedding, moving to a new place, etc.) so yes, start saving earlier.

And also, I’ve always liked nice things and the 20s I spent money on a lot of STUFF, and in turn I wished I had spent the money on more experiences and travel than stuff, dining out, cheap clothes, dumb things. I got to travel and do some stuff, but now coming back from an amazing trip to Paris, I think in the future I’d rather put my money towards that. In good news, we paid everything in cash/debit and didn’t have to break out a credit card once!

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