10 Financial Advice to my 20-Year Old Self

I am now in my 50s and, although we have a fair amount of money in the bank and some good investments, I feel that I could have done much more in terms of wealth-building. The first thing that I regret is not starting earlier. So, looking back, here are some of the things I want to tell my 20-year old self when it comes to finances. Maybe those in their 20s and 30s will also find something valuable in my advice.

1. Saving in itself is not a wealth-building strategy. No one will tell you that you can get rich by saving, but it is a good way to begin your journey. Having cash in the bank can help you start a small business using your own money without having to borrow from the bank. So, do save money regularly. However, your aim should not be simply to grow your money in the bank, but to use the money eventually whether to buy what you need in cash, start a business or make investments.

2. Buy everything in cash, particularly your wants. Want a new cellphone? Save money and buy it in cash instead of taking out a loan. Ditch the concept of buy now, pay later. If you can’t afford it now, then defer it until you can pay for it in cash. Live by the mantra: SAVE NOW, BUY LATER. Repeat: SAVE NOW, BUY LATER. SAVE NOW, BUY LATER. Why? Paying in cash can save you a lot of money because I’m sure you know that you end up paying more than what it’s worth when you take out a loan because of the interest on the loan. This brings me to my next point.

3. Loans have the tendency to pile up if you’re not careful about it. Why? Because it’s easy money and makes you think that the monthly payment is so affordable or ‘magaan sa bulsa.’ But what happens is that you are tied up and obligated to this monthly payment for several months or even up to four years. In effect, you have exchanged your freedom for the next few months or years for this amount of money and the interest on your loan. Yeah, you may have heard that there good loans and bad loans according to Robert Kiyosaki. But, until you have fully understood his concept, stay away from debts.

4. If you want to achieve financial freedom, then get rid of your mental and emotional issues about money. This is the biggest hurdle there is. It’s not whether you are born poor or not, the biggest hurdle is your perception about money. Get to the bottom of it because you cannot expect to make money if you have negative perceptions about it. If you think that money is the root of all evil, then what’s the point of having money? Do you want to know how to get to the bottom of it? Observe what you think of people who have money. Do you somehow think that rich people are bad people or that they were able to acquire wealth by stepping on other people’s toes? Do you think they are inherently bad? Do you think they are just stealing from other people? Do you think they are just oppressing and victimizing the poor? Yet, at the same time, do you feel envious of their success and wealth? All of these are indications that you have a negative attitude towards money and that you need to work it out. You cannot attain financial success and freedom if you have these beliefs. If you don’t like money, then money will not like you back.

5. Start a business while you are young. Any successful and wealthy person will tell you that having your own business is the best investment strategy there is. It is not easy and you might fail in your first few attempts. Just consider your failure as part of your journey to success. Learn from it, but don’t give up too easily. Stay on course and you will get there eventually.

6. Get yourself some financial education. Our parents did not educate us about how to manage money. There’s no financial subject in our educational system (unless it’s your course in college). So we must take the initiative to learn it on our own. There’s so many books on financial education and lots of free courses on the internet. Start your search with Coursera or edX. Warning, the courses may be free but you have to turn in some works (assignments, essays, contribution to discussion boards, quizzes), so do take them seriously.

7. Invest early. Trust me, the sooner you do this, the better. You will have more leverage if you start at a young age. You will also learn a lot by investing early – what’s good investment, what’s not. You might make a lot of bad decisions, but, then again, it’s all part of your learning curve. By the time you reach 40, you will be more financially sophisticated than most people and will probably be able to retire ahead of your peers.

8. Do not take financial advice from your neighbors or kamag-anaks (or your school teachers) who have nothing to show you. This is common sense and self-explanatory. Why should you listen to people who have not achieved what you want to achieve? Find someone who is successful and listen to that person because they can guide you to where you want to go.

9. Get out of your comfort zone. Get out of that job that isn’t paying you good salary. Get out of the place where you grew up unless that environment is helping you nurture and achieve your dreams. Don’t wait too long to do this because you will lose a lot of opportunity.

10. Make good use of your time. Time is money. What you do with your time is very important. If what you spend your time on/with does not add value to you, then it’s just a waste of your time. Sure, recreation and relaxation are important for your emotional and mental well-being, but make sure that you’re spend just the right amount of time on this activity and nothing more than enough. If you are spending 8 hours a day watching videos of cats and dogs or looking at the photos of your friends on Facebook, then do you think that’s still recreation? What value do they add to your personal and financial growth? From now on, assess your time by asking whether it adds value to any of the following major aspects in your life: personal (includes personal relationships), financial and spiritual.