A Letter to My Know-It-All Younger Self.
At the ripe age of 22 I launched my career in the financial services industry and was set to become a master of the universe. I first worked for a major bank and then a leading Wall Street firm. After thirty years in the industry I now realize I didn’t know everything during my early days in the industry. As I reflect on my career, here are a few things I wish I’d have done in my early twenties.
Save more. I wish I had deposited money in a savings account or money market fund for emergencies or opportunities. My savings account would’ve allowed me to stay out of debt and avoid hefty credit card charges.
Contribute More. My 401(k) plan was Greek to me and I had no idea what my options were. Even though I was in the industry I didn’t know what I was doing with my money. My employer and colleagues couldn’t or wouldn’t give me advice for one reason or another. I wish I’d maxed out my retirement contribution and invested 100% of my money in stocks.
Invest more. I should’ve set up a monthly investment account to invest in stocks. One of my first meetings with a prospect was a friend of mine. In 1990 I recommended he invest $50 per month in the Investment Company of America mutual fund (AIVSX). A $50 monthly investment into this fund from 1990 until today is now worth $62,100. He didn’t invest because he was afraid of stocks and I didn’t do it because I didn’t have any money.
Spend less. A dollar here and a dollar there and pretty soon we’re talking about real money. While working I’d spend $5 for breakfast and $10 for lunch. $15 might not sound like much but at the end of the year it’s $3,600! Investing $3,600 per year at 7% will grow to $340,000 over thirty years.
Charge less. Credit card use is easy to start and hard to stop. As a young buck, I’d spend money I didn’t have and this put me in debt. The interest rate on my credit card debt was more than 20%. If you pay the minimum payment on your credit card balance, you will never pay it off – never!
Learn more. A basic understanding of finance is necessary for survival. Understanding cash flows, debt payments and the time value of money are critical to your long term financial success. Take a class, read a book, watch a video or talk to an advisor about financial literacy.
Give more. I didn’t have any money when I started my finance career. Despite my lack of wealth, I could always find someone with less money. My first job was in downtown San Diego and since I didn’t have any money I parked a long way from the office. I passed several homeless people on my walk to and from the office. I had zero and they had less than zero. I wish I dug deep in my young pockets to help those in need.
Eat better. Habits start early so focus on eating well. Your body is a temple and should be treated with respect. Eating well will allow your body to age gracefully.
Run more. Not really. I ran all the time and I don’t think I could’ve logged any more miles than I did in my youth.
Don’t let anyone look down on you because you are young, but set an example for the believers in speech, in conduct, in love, in faith and in purity. ~ 1 Timothy 4:12.
Bill Parrott is the President and CEO of Parrott Wealth Management and is a fan of the youth movement. For more information on financial planning and investment management, please visit www.parrottwealth.com.
May 25, 2017