At the start of every new year, my family and I all sit down and write out a list of our goals – personal, professional, financial and social things we’d like to accomplish over the next 365 days. I save these lists. Sometimes I pull them out to review where I was two, five, even ten years ago.
What I notice is how much I’ve grown and how much I’ve accomplished. The last time I looked back at these slips of paper, I reflected on what I would tell my twenty-something self now about important life lessons I’ve learned over the years.
If I could go back in time and have a conversation with my younger self, here are the nine pieces of advice I would impart. Some are big, some are small, but all have value to me.
1. Give attention to creating the life you want and setting goals. Often, when people are just beginning their careers, they have a mild case of tunnel vision. The focus is on growing professionally and pulling down higher paychecks. I would say that, along with these things, set goals for what you want your earnings to be.
Taking a more passive approach to income is much simpler than being proactive. But when you don’t actively participate in your own earning potential, you’re selling yourself short. You get into the default of letting someone else do it for you. Trust me; you will always be a better advocate for yourself than any other person.
So, take that proverbial bull by the horns. Find answers to the hard questions like what you want from life and what matters most to you. These answers will undoubtedly change with time, but that’s normal. The powerful piece is that you’re exploring and charting your own course.
2. Start saving and investing now. It can be as little as $5 a week but make a beginning on the lifelong journey of saving and investing. What matters much more than the number of dollars you can afford to save when you’re just starting out is learning the habit of setting money aside. It’s like building muscle – every time you do it you get stronger, or better at it. Try to start out by saving 10% of your income every year. To make it even easier, put your finances on autopilot and have your savings come straight from your account, so you don’t even feel a pinch. Firms like Wela offer a perfect way to start building an investment portfolio.
3. Focus your attention on steady growth. I would go so far to say that people benefit from a healthy obsession with growth. It means your committed to changing, evolving and constantly moving towards your best self – both personally and professionally.
Be active in growing, in learning and in creating new experiences. Not only will you get to know yourself better, but you’ll also be more likely to meet your goals because the ones you identify will be the ones you really want to achieve. Sometimes this process will be scary, but it’s worth it.
4. Step outside your comfort zone. Don’t play it too safe; take risks. This is especially true when you’re younger. This is prime time to swing for the fences and watch what can happen. When you’re just starting out in life, you can afford to take bigger risks. Time is on your side, and if you fall, you don’t fall as hard.
Sure, you’re worried about failure. Everyone is. But don’t let fear keep you hamstrung and on the sidelines of life. And think of it this way – taking risks when you have kids, a mortgage, and a career can be even scarier. So, tell that fear to quiet down and let your mind relish in the potential rewards. This shift in focus will give you more courage to invent something, start up a business, or take a year to travel cross-country. Whatever your dreams may be, have the heart to take risks now.
5. Live below your means. I don’t mean to preach that folks should be on a strict diet of ramen noodles. (That’s what college is for!) What I mean here is that it pays to start building a habit of keeping your basic expenses low. The underlying principle here is that you want to have as much financial flexibility as possible. Save the fancy cars and sprawling houses (and the commitments that come with them) for later in life when you are more established.
A simple way to set yourself up for financial success is to use my TSL Rule, quite possibly the most painless budgeting process ever created. With this plan, you divide your gross income (meaning before payroll deductions) into 30% for Taxes, 20% to Savings and 50% for Life expenses. The TSL Rule is that simple.
6. Invest in yourself. Especially when you’re younger, go long on yourself by taking risks, spending money on things that are invaluable (like your education) and devoting time to learning new things.
I firmly believe that the most significant investment you ever make should be in yourself. Imagine the person that enters their dream career at age 25 versus age 55. The younger you have more time to reap the benefits of things like formal education, advanced degrees and skills, and just all-around exposure to new ideas and experiences. Consider college, graduate school, online courses, personal development programs and even reading as ways to invest in you.
7. Update your friend list. I know, this piece of advice isn’t all that nice, but it’s necessary. I’m always in favor of expanding your social circle with new friends, and sometimes that means dropping a few that aren’t good for you. We all know that one person who meets someone else’s success with jealousy or (worse yet) criticism. Cull these Negative Nancy’s from your circle. It may sting in the short run, but over time you won’t miss them. Gravitate towards people who share similar dreams and aspirations so you can motivate each other. Oh, and choose your inner circle wisely; data indicate that your income is roughly the same as your five closest friends.
8. Create, adventure and explore. My research on the happiest retirees has taught me the value of being interested in things, no matter what they are. The people that I surveyed who said they were happiest had over three “core pursuits,” or hobbies or activities that gave them great joy. The only way to discover what your core pursuits are is to regularly try new things. As a bonus, you may come across something you love to do that generates money, providing you with an income stream to supplement (or maybe supplant!) your current paycheck.
9. Pay attention to your health. Imagine if you just had one car, and that was the only car you would have for life. Odds are you would baby it and take special care while driving and get all the necessary check-ups and repairs. Our bodies are like this. We get one, and it’s our job to keep it in tip-top condition. When we don’t, we are more likely to get sick or lose energy. And it’s obvious that if we’re in poor health, we can’t be as productive as we like. So, investing in our health is investing in our greatest asset, for the present and the future.