Letter to My Younger Self: Finance Edition

Despite being the youngest of four, I didn’t really have an older sibling or a parent to show me how best to set myself up for financial success later in life. I am daughter of an immigrant, who at the time didn’t believe in investments so my exposure to what I should be doing with my money was limited to: CD’s, savings accounts and storing cash at home in case of "emergency". 

Now that I am older and have educated myself on finance, here is a letter I would write to myself:

Dear 21-year-old me, 

It doesn’t matter how much money you make, it’s about how much money you spend! Understanding this will help you as you navigate your early 20s when starting salaries are exactly that - starting. 

While you are still young, I highly suggest the following: 

• If you have this luxury - LIVE WITH YOUR PARENTS! I know that most people like to leave once they are able and making money, BUT I would venture to say that your parents may be your best landlord. Most parents won’t make you pay first month and/or last month rent. They also will not require a security deposit. Lastly, they won’t pull credit, dinging you for a hard inquiry. Outside of the above, I am certain the rent you’d pay your parents can’t be beat!

• Pay off any high interest debt. It is inevitable that as a young adult, you’re likely going to get in SOME debt. My suggestion is to make sure you do what you can to pay that off first (even before investing). The reason is, young adults are usually given exorbitantly high interest rates as they have no credit established yet. This means, if you only pay minimums, there is a great chance that a $30 top can easily turn into $100 after interest rates, a late fee here and there, etc.

• Make (and stick) to your budget! I know it’s very hard to get caught up and want to spend above your means but it will only lead to money woes in the future. By understanding your finances, creating a budget of what to spend on what and where will only benefit you in the long run. You want to make sure you’re keeping track of all your money coming in and all your money coming out. 

• Even a little bit counts… and this is especially true in investments. There are so many great services out now that make investing not only much easier, but affordable. A monthly contribution of $20 can turn into $1M by the time you’re ready for retirement thanks to good ole compound interest.

• Lastly, work on your credit. Credit scores help dictate life’s big purchases such as buying a house or car. The higher your score is, the more your interest rate is saving you money on monthly payments. You’ll need to make sure you’re making on-time payments, not applying for too many credit cards and learning the fine balancing act of using your credit without going into debt. 

Obviously, there are so many other things that we can touch on, but this is a great starting place for anyone who is new to managing their own financial future. We hope this was helpful and gives you a great starting point to your financial goals! 

Your Big Sis