Financial advice for those in their early twenties from someone in their late twenties

Financial advice for those in their early twenties from someone in their late twenties

In response to my last blog post, 74 Thoughts You Have Between Pay Days, a friend has offered some wisdom to us young folk (or just me?).

You’re welcome to take some of this advice, all or none. But just don’t say no one ever told you so (I am directing this last bit at myself, ha!).

Here is what he has to say…

After reading Alison’s blog post on the perils of monthly pay and the endless cycle of spending, I thought the thing she needed was some worldly advice from someone older (a little), more sensible (obviously) and richer (just). In the words of the great Cat Stevens: I was once like you are now, and I know that it’s not easy. Who’s Cat Steven’s you ask? If you don’t know, ask your parents. Or just Google it, whatevs. Did I just use the phrase ‘whatevs’?

Anyway, I pictured Alison writing her blog post. It was probably towards the end of a weekend and she was reflecting on the unneccessary shopping spree she treated herself to, the fact she had been out for every meal and the taxi fare she generously opted to shout everyone. She was clearly licking her financial wounds.

Here are a few facts that I needed to know when I was 23 and broke:

1. Going out on the town is expensive. Once you factor in drinks at premium prices, cab fares, food – it can get pricey. Having some friends over and enjoying a few drinks at home is a lot cheaper. I found that when I started to go out less I saved these costs:
a. A Taxi: Hopefully shared with a mate, otherwise $50-$100
b. A Kebab: No stopping on the way home for Macca’s or a Kebab at 2am.
c. Other peoples drinks: Shouts you say? How’s get stuffed sound? Because I’m a party animal, I drink mine with hast and end up back at the bar buying more cause I don’t want to wait for you to finish sipping your beer!
d. Misc: Pokies? Sweet, I’ll chuck a $50 in. Casino? Awesome, $200 evaporates. Barry’s bar quiz? $20. Anything else I don’t really need but seems like a good idea because I’m pissed? Yep, I’m in.

NET RESULT: Where did that $150 – $400 go?

2. No one gives a shit about your designer clothes. I can’t really speak for the ladies but if they’re anything like the gents, you don’t need to spend a lot of money on clothes to look good. Work out what suits you and bargain hunt accordingly. Oh, and you don’t need a new outfit every time you go out. Only Royalty and celebrities do this and they’re loaded. Speaking of loaded, unless you earn good money, like really, really good money, steer clear of designer brands you wannabe. Do you think your fooling anyone in your Hugo Boss shirt drinking Carlton Draught pints at a ‘The Irish’? You’re not. You’re a dill.

NET RESULT: No more $99 Ralph Lauren Polo’s for me. Hello, DFO and Elwood shirts for $30.

3. You’ll be 30 in the blink of an eye. Seems like yesterday you graduated school, doesn’t it? Well if you’re Alison’s age, it was 5 years ago. It feels like yesterday to me and I’m 6 months off 30!! The next time you blink, you could be nearly 30 too. Start saving now. Yep, that’s the double threat, bold and in italics because it’s that important. By the time you really need it, you’ll have it. What’s more, by the time you’re my age, the interest over the next 6 years means you will have a lot of money that the bank will have thrown in as well, interest bitches. And another secret: The more you put away, the more motivated you are to keep saving. I spent two years living with my future wife at her mum’s place. We were saving for a house and I needed to pay off some debt I had from when I was 23 and living beyond my means (aka. Living the dream). Not good. We managed to save $80,000 in two years for our wedding and a house deposit (with some help from family). The good times didn’t make that easier, in fact, I resented them for turning me into such a financial loser.

NET RESULT: I didn’t save when I was 23 but if I could go back, that’s the one thing I would change. If you can save $500 per month, by the time you’re my age, you’ll have $42,000 plus interest.

4. Friends, real friends, last forever. Dickheads are everywhere. The best times are had when you’re getting to know people better so cook dinner at home and invite them around. Crack a bottle of Pepperjack Shiraz and let the good times flow. Play a board game, they’re awesome fun. Point is: you don’t have to go out every Friday and Saturday night to enjoy yourself. Truth be told, half the people I used to go out with aren’t even close mates anymore. You’ll work out who really wants to be friends with you and who only wants to get loose with you on the weekends when you actually stop getting loose on the weekends. How? You’ll stop getting loose on the weekends and they’ll stop calling.

NET RESULT: Let’s say I went out twice a week from the time I was 18 until the time I was 25 (which is about right) and spent an average amount of $120 (conservative), I spent about $42,000.

5. Don’t use credit. Get a small credit card ($500) and pay it off when you max it out. Good for your credit rating and you can’t get into too much trouble. My brother and I have a theory: you live at your credit limit. I have a $500 credit card. Sure, it’s totally maxed but its only $500. So if it’s going to be maxed regardless, I’m glad it’s not $5,000 or more.

NET RESULT: Got $5k on credit cards paying 15% interest? You’re paying $15 per week in interest alone. Priority No.1: Get rid of credit card debt, it’s a killer.

6. Feel the security of cash. The best feeling in the world is having some cash in the bank. You know that no matter what happens, you’re covered. No more “I hope this goes through” doubt at the register.

NET RESULT: I nearly cried at times. No cash here. Always at the most inconvenient times.

7. Don’t marry a financial liability. And by that I mean someone with no money that lives beyond their means. It’s tough out there and you need help. If you marry/live with/have children with someone who doesn’t get it, you’re doomed. Try swimming with an anchor tied around your waist, same result. You’re going to sink. Ditch those who drag you down, your financial independence is your responsibility, don’t let anyone else take it from you.

NET RESULT: Thank God, I married someone who got it and up until we got together, I was a pecker-head. I did few of the things that I mentioned above and by the time I was 26, I had no savings, credit card debt and little prosperity of ever owning my own home (which is something I have always wanted). Luckily (for both of us), I made a decision to pull my head in and get my shit together. I paid off my debt and started saving with her. I’m so grateful we own a house and there’s cash in the bank. I still go out and sometimes I have benders ($700 about six months ago) but they’re few and far between now. Maybe I’m just starting to show signs of being a silly old fart!?

Good luck to anyone else doing what I did, it’s a long and tough road.

So friends, your thoughts?  I personally am still having inner conflict about whether to splash out while I can or start being an adult. Who knows. Talk to me in a few years time. 

Lastly, to my anonymous friend – thank you, I appreciate your advice, even though you sound like an old fart… 😉

3 thoughts on “Financial advice for those in their early twenties from someone in their late twenties

  1. i enjoyed reading this, its good to hear some advice from someone who has been where we are.
    That being said not everyone wants/needs to won their own house by the time they are 30.
    i am working on paying off my credit card debit, and cutting costs where i can
    this means no monthly manicures, no unnessary shopping, swapping to a cheap car insurance and opting to go out once a month instead of once a week, or if i do go out… drive and not drink! save on alcohol and cabs!

    people spend years paying off morgages, why worry about it when im 20 something, young, fit, healthy and with a heart for adventure when i can pay it off when im 40 and have nothing better to do 😛

  2. Great advice, well done you guys, I love these blogs! One point I would like to add – how about paying $20 a month automatically into your superannuation account? You won’t even notice it’s gone, and when the time comes and you are really old, you will think how clever you are to add thousands to your account without any pain (and you could also investigate receiving the Federal Government Co-contribution – money for nothing!!)

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