The running joke in my friend group right now is that I’m no longer YoungMoneyFinance, and instead and more like MiddleAgeMoneyFinance. I’ve been in the working world for over a decade now and have had a lot of life experiences. I’ve: held jobs at 3 different companies, gotten promoted, gotten raises, had my car stolen, bought a house, sold a house after having a terrible neighbor, become a landlord, bought a rental property, opened credit cards, taken amazing trips (1 millions points for Italy)and have become a Dad. I’ve learned a lot and as a buddy told me – education isn’t free and many of these experiences have come at a cost to learn them!

I have a sister that graduated recently from college and I’ve enjoyed sitting down with her to tell her a few things about personal finance. It’s been fun giving her little tips and tricks and I think there’s so much noise out there that it can be tough to know what’s legit vs. what’s not legit and sometimes learning a few little things can really go a long way.

My sister actually referred a few friends and I’ve had a few sessions walking them through a “New Young Professional Personal Finance Checklist” that helps young professionals understand a few of the basics to get them started. It’s been received really well and if you are in this category and think you’d benefit from it (or know someone that would) – shoot me a note at ben AT youngmoneyfinance.com and we’ll get something setup!

I thought it could be fun for me to reflect on my own 23 year old self and what I would advise him on. Of course everyone is different and has their own situations and circumstances, but here’s what I would go back and tell my 23 year old self as I was getting settled into my first job!

Great job on the emergency fund

Having a well-stocked emergency fund of 3-6 months of expenses set aside in a separate savings account is so crucial to the financial success of a young professional. It’s not a matter of if a financial setback will occur to you; it’s a matter of when. I’ve had a few surprise bills pop up, I’ve had cash flow issues where I needed the money sooner and in my time I’ve had to dip into my emergency fund twice. I quickly replenished it but was so thankful I had it!

57% of Americans couldn’t survive a $1,000 unexpected expense. Yikes. Don’t be in that category because a $1,000 expense will hit you sooner or later. Don’t let all your hard work in advancing in your career and your finances set back like that. Build up an emergency fund today!

I’d give my 23 year old self kudos for starting with an emergency fund. I moved to a new city post college and owned the old Jeep that I had (which later got stolen!), I had enough for the security deposit and first month’s rent at my apartment and maybe $1,000 cash and that was it. From my very first paycheck I started building up an emergency fund. It was super slow going, I’d do maybe $100 or $200 each month but I focused on building it up and kept at it!

Index funds are really all you need

I was a business major in college and really thought I was hot stuff when it came to stocks. I read Yahoo Finance on the reg and I listened to Jim Cramer’s Mad Money almost every morning (I didn’t pay for cable…so I podcasted it). Looking back, I really wasn’t hot stuff and wasn’t very good at picking stocks. For every winner I picked, I had 2 losers in my portfolio. Still, I continued to put way more of my investment money in stocks than I should have and continued to lose money, or not gain nearly as much as I could have.

It was a few years in that I found out about this wonderful financial instrument called an index fund. The idea is that it’s really not possible to beat the market, so why even try? Instead of trying to pick winners, instead just pick them all and let the averages play out. I then heard of this company called Vanguard, who was absolutely dedicated to saving investors money by having low fees. I then landed on $VTI – or the Vanguard Total Stock Market Index.

I then for a whole year tracked my gains and losses of individual stocks and at the end of the year compared them to what $VTI returned and it wasn’t even close. I was positive for my stock trading but it was like a 5% return vs. a 15% return. It was then that I hung my hat as an individual stock trader and went all in (ok like 98% in…I still have a stock or two) on index funds.

Note to 23 year old self – don’t fool around with individual stocks, just buy index funds.

Save more in your 401(k)

A few years into my working career when things had settled out a bit, I was in a decent rhythm financially. We had Mrs. Money’s student loans paid off and were saving up for a house. Each month I had a savings and an investing goal, and I contributed to my 401(k). It had taken me a few years but I had worked up to setting aside 15% for retirement and I felt good about it. I then saved for things like a house and a car, and then had a general brokerage account where I put in money. All seemed pretty smart on paper!

What I would tell my 23 year old self is to forget the brokerage account and after doing my savings, put all my investing money in my 401(k). You can contribute $22,500 to a 401(k) each year and that is then money that grows in a tax advantage account. Either you pay taxes now and not later (Roth) or pay no taxes now and pay them later (Traditional). Paying less taxes is nice. I’m not sure why I was so insistent upon saving outside of a 401(k) BEFORE I had maxed out my 401(k). Yes it makes sense now that if you’ve maxed out your 401(k) then by all means invest it in a regular brokerage account. But to miss out on potential tax savings by putting investment money somewhere other than a 401(k)?

Note to 23 year old self – keep saving but instead of putting investment dollars in a regular brokerage account, put it in a 401(k)!

Save in a HSA

Paying for healthcare sucks; it’s so expensive. Now with kiddos and me getting more MiddleAgedMoneyFinance vs YoungMoney, I feel it. But back when I was 23 I felt like a young invincible and didn’t get much healthcare at all.

If your employer offers you health insurance, you may have a few options like a PPO, HMO or a High Deductible. It’s a sliding scale – High Deductible < HMO < PPO for monthly premiums but High Deductible > HMO > PPO what you’ll pay out of pocket until you hit your deductible. It took me far too long to realize but it’s basically a math equation that can balance itself out. My current employer will give me the amount of my deductible in my HSA if I pick the High Deductible plan.

But as a 23 year old you potentially will fall into this young invincible category and not consume much healthcare. So as a 23 year old I kind of shrugged this off and didn’t think much about it.

BUT – a HSA I’ve learned later in life is kind of a magical financial hack. It’s tax friendly on multiple layers – you don’t pay taxes on it when you pull it out of payroll, you use it to pay for healthcare (i.e. at that tax break discount), the money is yours forever and you can even invest it. So, I really wish my 23 year old self would have put $500…$1,000…$2,000 in a HSA each year and then invested it. Having that grow at 8% tax free from tax free money…amazing!

Note to 23 year old self – yes you’re healthy now (PTL!) but you will consume more healthcare one day. A HSA is a great way to get ahead of it and save on taxes.

Be greedy when others are fearful

Warren Buffet (investing GOAT) has a quote that says, “be greedy when others are fearful and fearful when others are greedy”. Basically a quote that says do the opposite of whatever the market is doing.

I have been pretty good about not being fearful when others are fearful. Although 2009-2021 was a massive bull run (i.e. stocks going up), there were plenty of dips in between and mini crashes here and there. Also during that time there was always a bit of fear that the recession was coming…we just didn’t know when.

I did a good job about sticking with my strategy of investing 15% into my 401(k) and investing into my ESPP (employer stock purchase program) and didn’t change it. I had friends that would at the slightest drop of the hat sell all stocks and go to cash and they would get burned because they sold too low and had to re-buy too high. I’ve not panicked and held steady, and I’m proud of myself for that. Don’t try to time the market – it’s near impossible.

What I would tell my 23 year old self is to be a bit more greedy when others are fearful. I remember a family member telling me in March of 2020 (early pandemic when stocks dropped like 20%) that he was BUYING big into stocks. I told him he was crazy! I ended up buying more stocks late 2020 and enjoyed a huge run in 2021 but dang what if I had bought in early 2020. Also interest rates in hindsight were so low for so long…and now with mortgage rates in the 8% and it being tough thinking they might stay high for a bit, I kind of wish I had bought another house or two (I know, this is a bit of crazy talk). I told my realtor recently I wish I had borrowed every dollar I could have and bought as many houses with that money in 2020.

Hindsight is definitely 20/20 and it can feel really scary in the moment but I guess I’d tell my 23 year old self a) keep not panicking but b) hey maybe toss a little more in when things feel dire. Most times they bounce back decently quickly!

Don’t stress as much about saving

Ha! I bet you were waiting for this one. “Oh fancy personal finance blogger wonder what they’d tell their 23 year old self about spending money”. So I’ve come around a lot when it comes to saving vs. spending and have definitely loosened up the purse strings a bit. My famous posts are “Why I now buy a $3 latte” and “The importance of spending money”.

Now my 23 year old self truly didn’t have all that much extra money laying around, and I’m thankful for the sacrifices I made that helped get me here where I am now. But, would it have killed me to go out to lunch once a week with colleagues vs. religiously packing that PB&J, bag of chips, little Debbie snack and 3 carrots? Sure I saved $5-$10 each time but sometimes I regret not eating out a bit more. Or going out to dinner a bit more, maybe splurging on that new gadget or taking that extra last minute trip. Of course it’s easy for me to say this now given where I’m at but I do think I would advise my 23-year-old self to loosen up a bit more!

Life I’ve learned is about balance – enjoying the moment now while also trying to save up and invest in the future for future enjoyment. But there’s no sense in denying yourself everything now for a future that isn’t guaranteed! So go out to lunch this Friday, say yes to that random dinner you get invited to, and heck even go see that movie you’ve been wanting to! (just don’t get popcorn…that stuff is way too pricey).

TLDR

Welp 23 year old self – there you go a couple of tips and tricks to help you out. I appreciate your focus and drive – it’s helped out tremendously and a few little tweaks I think could help you go even further!