10 Financial Moves I Made in My Youth That Secured My Financial Future

college campus

My neighbors’ oldest child just left for college this fall. Watching him load his car with electronics, clothes, and “stuff,” headed for his new apartment, I started reminiscing about when I was just starting out. When I was younger, I lived a life that made others think I was poverty stricken. I didn’t live that way by choice, but my first jobs didn’t pay enough to live any other way and I barely got by. Now that I’m older, I can appreciate that lifestyle for what it was: a smart (if painful) way to get ahead financially. At the time, I thought my lifestyle was punishment for some major past life transgression, but now I see that my choices then left me on firm financial footing for the future. Watching the kid next door head out, I’m not certain he’ll be as fortunate.

I’m not sure that kids today understand how important it is to get on the right financial track when they’re young. It seems that most of them expect to start out with a lifestyle exactly like (or better than) their parents’. But first jobs still don’t pay much and tuition is expensive, so the only way to have a fancy lifestyle is to finance it on credit cards or through loans. This leaves many kids with a crushing debt load and a future that is in jeopardy before they are twenty-five.

I’ll admit that I didn’t have the choices that kids have today, so I had fewer ways to get into financial trouble. Credit cards were hard to come by. You had to demonstrate an ability to pay them back in order to get one, which is not the case today. Same with loans. I couldn’t pay anything back, so no extra money for me. This made me more disciplined with money because I had no way to get more, other than to get more jobs. Easy credit wasn’t part of my life. I was forced to be smart with money from an early age and it has carried over into my adult life. I think kids today would benefit if easy credit was removed from the picture and they had to live within their means.

While I was reminiscing, I came up with ten things I did (or was forced to do because I had no other choice) that put me on the path to wealth, even if I didn’t realize it at the time. Maybe if more kids applied some of these strategies we would have fewer young people in serious financial trouble.

1. I went to a public, in-state college. I had the grades to go out of state or to a private school, but my budget would only stretch to public education. Rather than take on crushing student loans, I opted for the cheaper alternative and have never regretted it. I received a fine education and I received more scholarship and grant money by staying in-state than I would have had I gone out of state or to a private school.

2. I lived in the dorms during college. I resisted the urge to get an off-campus apartment and instead remained in the dorms for four long years. Why? It was far cheaper and it was what I could afford. Plus, living in the dorms gave me access to the school cafeteria, which was far cheaper than buying my own food or eating out every night. Yes, the institutional food was awful, but it was what I could afford at the time. I still have mac and cheese flashbacks, though.

3. I didn’t keep a car in college. I realize this seems antiquated now, but I didn’t need one. Everything I needed was on campus or within walking distance (it still is in most college towns), so I saved on gas, maintenance, and payments and instead funneled that money to tuition and books. Yes, I got bored sometimes, but I learned to make do.

4. I worked in college, and then I worked some more. I worked two jobs during the school year. One was on campus in the library, the other was at the local dumpy restaurant. Neither was high paying, but together they gave me enough to get by. During the summers, I took full-time jobs to earn extra money and I squirreled it away for the fall.

5. After school I moved into a rat hole apartment. It was tiny and I had no furniture except some hand me downs and some crates. But rent was cheap and it was in a decent neighborhood. The money I saved by not moving into the swanky development up the road went into creating an emergency fund, buying the beater car (see below), and saving for a house.

6. Once I got out of school and started working, I bought a beater car to get around in. The thing was sad to look at, but it ran and I could pay cash for it. Without a car payment, I was able to save more money for big things like a house and retirement.

7. I started putting money into a 401K when I got my first job and I have never cashed it out, even when changing jobs. I let the money grow untouched and gradually increased my contributions with each raise and better job. The financial calculators tell me that, even if I stopped contributing today, I would still have over five million dollars at retirement. Not too shabby.

8. I didn’t eat out, go to clubs or bars, engage in recreational shopping, travel, have cable, or see many movies. My entertainment budget was nil so if it wasn’t free, I didn’t do it. Despite that, I had a good time going to free concerts and museums, borrowing books from the library, going to the park, going on day trips to the lake, and hosting pot luck dinners with friends. Looking back, I think my entertainment then (except for travel) was of higher quality than now. I spent more time with friends and family doing things that enlarged my brain.

9. I avoided credit cards. Even when I started earning enough money to be a credit card company’s dream, I declined the many offers I received. I kept one card because I traveled on business and needed it for reservations. But the company paid it off and I never used it for anything else. I refused to finance anything, including clothes, food, “toys,” and electronics. I could have, but I didn’t. I paid cash for everything and when I ran out of money, I stopped spending until the next paycheck.

10. Probably because I didn’t have much else to do, I made it a point to educate myself about finances and consumer issues. I read books, listened to advice shows, and talked to financial professionals. Saving is great and necessary, but knowing where to put the money I
save and how to use it wisely has strengthened my financial future more than anything else on this list.

The sacrifices I made in college enabled me to graduate with no debt and even some savings. Once I was out of school and working, I continued to be careful with money, avoiding debt until I bought my house at the age of twenty-five. Gradually I have replaced the beater car, bought some decent furniture, gone on some vacations, bought some cool “toys,” and generally expanded my life over time. The key is that I didn’t do it all at once and I waited until I had to money to move up the consumer spectrum.

I know kids today don’t want to hear my advice because it involves sacrifice. Yes, you’ll miss out on some fun and own far less cool stuff. But I know of no other way to set yourself up for a strong financial future than to gradually build your lifestyle over time and to educate yourself in the process. It’s easy to say, “I’m only young once. I want to live life, now. I can catch up later. Retirement is far away.” But the point is you are only young once and that is the time to start building your financial future and getting into good financial habits. It’s much easier to live in a rat hole apartment, sleep on the floor, and eat Ramen noodles every night when you’re twenty-one than when you’re sixty-one. If you aren’t careful with money in your youth and live within your means, that just might be what your future holds.

Image courtesy of I Am Paul’s Typing Fingers

This entry was posted in Budgeting, Cars, Credit Cards, Debt, Education, Frugal, Housing, Personal Finance, Saving Money. Bookmark the permalink.

6 Responses to 10 Financial Moves I Made in My Youth That Secured My Financial Future

  1. Hilary says:

    As a college student, I feel the need to defend myself and my generation from a few of the things you claimed in your post.

    First, I think that getting credit cards young is vital to establishing good credit. Of course, this implies that you are using them responsibly. But, I have heard before that to qualify for top-notch rates when you are older, you need to have had lines of credit open since the age of 21. Plus, you miss out on the opportunities that credit cards have, like 1% cash back rewards. I just opened my first rewards card and it feels pretty good. Paying for grad school applications (hardly a frivolous expense) gets me a bit of cash back.

    Second, while I don’t want to start a private school vs. public school debate, I have often heard the “you get just as good an education at a state school as a private school” debate often, since I am at a small private college whereas almost everyone else from my high school opted for the state school. However, I would never trade this experience up for stronger financial footing in the future. I have been blissfully happy in college, whereas many of my friends who opted for the state school have not been. I needed to get away and be in a community of like-minded people. Basically, I think college is one of those things worth going into debt for.

    Third, I am well aware that much of the older generation is disgusted by the level of consumerism that us young folks have. I think that many people forget, however, that we live in a generation of cheap, dispensible goods. Sure, most students have a fridge, couch, rugs, TV, etc. in their dorm rooms. But, each of those items probably cost them less than $50. If it gives you any hope, I am spearheading an effort at my college to start an on-campus resale shop of these items, and many of my peers across the nation are doing the same thing. We need to adapt and respond to the times, but we can’t continue to live like things are the way they were 25 years ago.

    I just don’t think people give us enough credit as a generation. Things are different, sure, but time will tell if we are all really going to be worse off. And rest assured, there are still plenty of very, very cheap college students out there, who sacrifice on a regular basis. Don’t let stereotypes about who we are blind you from the wonderful, though different, things we do on a regular basis.

  2. Nicholas Aretakis says:

    Jennifer, I loved your article. It preaches to the core of what I have studied and have written about in my first book, No More Ramen: the 20-something’s real world survival guide. Your article made it’s way to me in my daily Google alert.

    Feel free to email me directly.

    Nicholas Aretakis

  3. Megan says:

    And, today at major public universities, living in a dorm costs way more than living in an apartment. And, the meals plans cost more than my rent for 3 months in my OWN apartment. But, I must digress, because this is a general article. Although, most public universities I know have very expensive dorms– even the cheapest dorms are expensive.

    I guess it’s all about living in a college town.

  4. michelle says:

    “I didn’t eat out, go to clubs or bars, engage in recreational shopping, travel, have cable, or see many movies”

    I think this is truly sad. I had a tiny flat (I would not even call it an apartment), came from a single parent family, no car, worked 2 jobs, earned a scholarship and still found it important to engage in certain activities when I could.

    I didn’t have cable but I loved when the film festival took place. I was more than happy to support the artist by paying to see their independent film. I love a good book and sometimes I wanted my own copy, not just what I could borrow from the library. Eating out for me is reserved for those places that leave me feeling satisfied and glad that I had the experience. I never ate crap, substandard cafeteria food to save a buck. How did you feel after those meals? Were you satisfied? Did you feel well? I never ate Ramen, not even once. I bought my food at farmer’s markets and always cooked a fresh, healthy meal, every single day of my college life. As for going out – it was FUN! I’d be a different person today without many of the experiences I had socially in college. Travel always has and always will be one of my major passions. A certain awareness of other cultures and peoples can be obtained from a book or a movie, sure .. but there is nothing more enriching that immersing oneself in a culture other than your own. How sad that you missed all these fantastic pursuits when in your 20’s – when you were young, with your whole adult life ahead of you! You say that you have expanded your life over time – well, we all do. The building blocks that you refer to in terms of finance also applied & still apply for me in terms of personal experience.

    I watched my money but I wasn’t always looking for freebies. Some of the money I spent on those activities enriched my life significantly.

    It is important to focus on one’s financial future – that goes without saying. But I agree with a lot of what Hilary has to say – this is a different generation. I do not encourage the level of consumerism that exists now but the life that you describe has little relevance in today’s world. It’s like listening to your grandfather talk about walking to school barefoot, in the snow – it just doesn’t apply anymore.

    What will you do with your 5 million? You don’t mention kids. You don’t talk about the life that you have now other than what you have accumulated. You can’t take it with you when you go. When someone asks you what your life was like in college, what do you say? I don’t have 5 million but I have a great home, a family & a wealth of memories from my days as a student. I feel I’ve lived! And I look forward to what’s to come.

  5. Odalys says:

    I have to agree with you here, I am in college (public) and I am living on the bare minimum because I have long term goals. My expenses are rent (living on campus is RIDICULOUSLY expensive) gas (in Tampa, you need one) and food. That’s it, no cable, phone, subscriptions, etc.
    In turn, I have a couple thousand in a high yield savings account and I’ve saved up to go to Italy for 6 months… I think its ridiculous to think that because I am being stingy with my money that I will not have fun in my college years. I just have different priorities.

  6. Reader says:

    It sounds like the author had fun, just doing cheap stuff with like-minded friends.

    I do like the question about 5 million dollars though. Wouldn’t 3 million be enough, if it meant that in college you got to have a round of drinks at the local pub a few times a year, laughing your asses off and waking up with crazy stories?

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