It was the year 2007, my first Christmas as an employed millennial. Do you know what I thought that meant? A “FAT” bank account and access to Christmas sales. Little did I know that the word “FAT” was relative and the end result of Christmas sales would be Sprite soda and crackers lunches in the month of January.
They say hindsight is 20/20 and I surely did not have much about money. In my early youth, I had poor money management skills. As an adult, I’m grateful for some of the decisions I made, but I wish I knew and did more sooner.
Wouldn’t it be nice if we could go back and tell our younger selves what to do and how to spend our money? Would I listen to my older self? Probably not. But if I could, here are six (6) financial lessons I would have shared with my younger self.
1. Look after your health
My friends and I enjoyed life in our 20s. We spent a lot of money on foods high in saturated fat and alcohol consumption. Some of us signed up for health insurance, while others did not. Those who didn’t found themselves struggling to afford it at age 30 because they now suffered from underlying conditions making premiums higher and the qualifying process difficult. Your health impacts your savings, so look after it and get insurance coverage as early as you can.
2. Have a budget
Like many, I used to believe that being on a budget meant that I was living like I was broke. But living from paycheck to paycheck was a clear indication that I would soon be. Having a budget helps you spend your money more effectively. The moment I differentiated my true needs from my wants, it was easier to make sacrifices and manage changes so that I could afford both insurance and online shopping. In the long run, it eventually helped safeguard me from a lot of credit card debt.
3. Save as much as possible, especially for emergencies.
Do you know what it feels like to have less than $50 saved in your account and one week left before your payday? I do. Research indicated that more than half of Americans cannot finance an emergency less than $1,000. I wonder what that number is like in the Caribbean. When it comes to saving, more effort should be placed on consistency and habit rather than the amount. I started with $20.00 monthly through budgeting and tracking expenses. It became easier when I automated that amount from my salary every month and gradually increased it. I felt proud of myself.
In September 2017, I saw the true value of having a saving pot when Hurricane Maria ravaged my country. My pot was large enough to assist my family cope with the uncertainties of the future. Sometimes life can take an unexpected turn, but having savings can help handle stressful situations.
4. Invest in your future
Your biggest asset is yourself and my greatest investment has been in improving my skills and talents. I began this process at age 18 and although it was a financial struggle, I had time. Enough time to accumulate student loan debt that was paid off before age 35. As my situation improved, I began planning for retirement using insurance products, and stocks. If you’re in a position to invest, seek professional advice to begin sooner than later.
5. Keep debt manageable and ALWAYS pay it off
Many may argue that debt is a part of life and must be accumulated throughout life. While I agree, some debts like credit cards and high-interest payday loans tend to limit your financial freedom. At age 23, I had over $5,000 worth of credit card debt and it was mostly accumulated from buying luxuries. It took me more than three (3) years to pay it off using the debt snowball technique.
It should be noted that other debt for personal development and entrepreneurship, though beneficial, must also be managed. If you want to keep debt under control, spend within your means, and pay it on time.
6. Delay Gratification
Sometimes I look back and wished that I did not squander a lot of my money. I spoiled myself A LOT and overindulged on luxuries until it got to the point where I could not enjoy a good time with my friends comfortably because I had no money left.
It’s easy to identify if you are overspending. Signs are having loads of credit card debt or having little to no savings. If you want to avoid living from paycheck to paycheck, save, invest and keep debt low then learn the art of delaying gratification and never spend more than what you earn.
About the Author
CEO & Founder of Finance Focus Consultancy, Luana Laurent BSc. MSc.IF is passionate about helping individuals to realize their financial goals and make wise financial decisions. Her services offer business plans and projections as well as expert advice on personal finance including budgeting, investment strategies, savings & available financial products. Luana also works as an Examiner at the Dominica Financial Services Unit. She remains active in her community, serving as the newly elected Director of the Rotary Club and the Treasurer of the National Youth Council of Dominica.