This article is a call to all of you just out of high-school, just out of college, or in the newlywed phase.
It really applies to any ages, but being in your 20s you have the opportunity to avoid so much financial heartache that so many of us “older” folks have gone through because we didn’t get this advice when we were your age – or we didn’t take action on it.
So here I am 37 years old as I write this. This is a letter to my 21-year old self:
Hey Bob,
A few things:
- That girl you are dating, she isn’t the one. God has another one that is so much better for you. Start acting like a Godly man that is worthy of her.
- You are going to lose your hair soon, so enjoy it while it lasts!
- Go buy the domain name YouTube.com – trust me.
Now, I know you are seeking wisdom on how to do this “money-thing” the right way.
So I am going to give you a checklist of 4 money habits you should start doing right now. They are going to seem like they aren’t that big of a deal. They aren’t going to seem urgent. They are going to seem like you can start them later. But just trust me, do this right now. It will never be easier to start them. Every day you wait it will only get more difficult to create these habits. The amazing thing about a habit (good or bad) is that once established, it kind of carries itself. The more you do the good habit the easier it gets to maintain it.
Financial success isn’t about having a high income.
I also know you think that if you want to be financially secure that you need to land a killer job, create a killer startup, or make it as a rock star. The reality is that while a high income CAN help, in most cases it actually makes it worse. The problem with a high-income (especially when you aren’t ready to handle it) is that it often leads to terrible financial habits from the underlying belief that things will always stay “sunny”. And when the rainy days come and your income gets chopped – as it will by 50%+ multiple times over the next couple decades – it will be really difficult to break those bad habits.
The reality is that the lessons here pertain to all ages, it is just that if you can develop these habits while you are still young, it will be SO much easier. You will be setting yourself up for a life of financial success – regardless of your income level.
Proverbs 1:33 sums it up really well:
“Whoever listens to me (wisdom) will dwell secure and will be at ease, without dread of disaster.”
At this point in my (your) life I have given out a lot of financial advice and sadly most people procrastinate and don’t take action, and then do not get the results. Because I love you (you are me after all) I am going to give you a loving threat: If you don’t start these 4 habits right now I am going to come back to 2001 and rip that Dave Matthews Band CD right out of your boombox, kick you in the seat of your bootcut jeans, and post pics of it all to your MySpace account!! In all seriousness, this is a big deal. And you are at a fork in the road and you get to choose which way you go.
“Today I have given you the choice between life and death, between blessings and curses. Now I call on heaven and earth to witness the choice you make. Oh, that you would choose life so that you and your descendants might live!” Deut 30:19
Far too many people simply don’t make the best choice, because it isn’t easy. But having seen just a little bit of the fruit of some good choices, trust me it is far better than you can imagine. And even though it isn’t easy, it will never be easier than it is right now – so be wise and do it. Alright, I am starting to feel like I am rambling like grandpa (bet you never saw that coming), so let’s get to the 4 money habits.
The 4 money habits you should adopt today!
1. Refuse to get in debt
I know you have pretty much maxed out your credit card, so pay that thing off ASAP and get rid of it and just use a debit card. You might be able to use a credit card and successfully pay it off each month in about 10 years, but I know you well enough and you are not ready for it – so just get rid of it. The monthly interest charges are destroying your financial future.
Also, refuse to buy into the belief that you have to have a car payment. Save up and buy an old reliable car with cash. You can do this! Quit worrying about impressing girls with the car you drive or anything else you waste money on – that is not the kind of girl you want to marry anyway.
Here is a little about what God thinks about debt:
Proverbs 22:7 (NIV), “The rich rule over the poor, and the borrower is slave to the lender.”
Deut 15:6: “For the LORD your God will bless you as he has promised, and you will lend to many nations but will borrow from none…”
2. Start giving 10% and always look to increase it
Over the next 15+ years of your life, you are going to see God do some amazing things as you consistently tithe and stretch your giving even further. If I have learned anything from all the giving Bible verses, it is that you cannot outgive God and I have yet to run into a situation where giving more wasn’t the best approach. Don’t believe the lie that so many believe that you will give more when you have more. It is easy to think that way, but it just doesn’t work that way. Giving is a habit and the sooner you get comfortable making it part of your life, the easier it will be to maintain.
Check out this great Rockefeller quote (one of the richest men to ever live):
“I never would have been able to tithe the first million dollars I ever made if I had not tithed my first salary, which was $1.50 per week.”
And I will leave you with this Biblical promise:
“Bring all the tithes into the storehouse so there will be enough food in my Temple. If you do,” says the LORD of Heaven’s Armies, “I will open the windows of heaven for you. I will pour out a blessing so great you won’t have enough room to take it in! Try it! Put me to the test!” Malachi 3:10
3. Automate retirement savings in a Roth IRA
As you get older you will want to get into more hands-on and complicated forms of investing, but for now, let’s just make this super simple by automating retirement savings. Open an Acorns account (the Acorns Later option) and choose the ROTH IRA. And be sure to contribute at least $50-$100 each month. Use the Recurring Investment option to make it a set-it-and-forget-it thing.
Albert Einstein is quoted as saying “Compound interest is the greatest mathematical discovery of all time.”
When you start young you can tap into so much more of the power of compounding than those who start later in life. Regardless of whether or not you plan on retiring, why not just have some money saved up to give you more options when you are older?
“The ants have no chief, no boss, no manager—no one has to tell them what to do. You’ll see them working and toiling all summer long, stockpiling their food in preparation for winter.” Proverbs 6:7-8 (TPT)
4. Start budgeting
As a Christian, you have a responsibility to tell your money (the money God has entrusted you with) where to go.
I know that currently at the end of each month you have no idea where your money went. What if you went to the bank and the bank teller told you they are sorry that your checking account has $100 less in it, but they don’t know where it went? I know you well enough to know that you would quickly close your account. After all who would trust a bank that loses your money?
So let me ask you, why should God entrust you with more money if you don’t know where it is going? This is why budgeting is a critical part of being a good steward. Even if you don’t have enough to make ends meet, at least you are showing God that you are a money-manager worthy of handling more. I know you hate budgeting and I know it has never worked for you. This is because you have been doing it wrong. You have made it too complicated and haven’t budgeted for fun stuff.
The Bible even tells us to pay close attention to our money:
“Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever…” Proverbs 27:23-24
If you can just develop these 4 habits. If you get these 4 things right, you can make a lot of other financial mistakes in your life without much consequence. Life is uncertain and unpredictable and there is no magic pill to guarantee that we will not encounter financial challenges at some point in our life. We have Jesus as our guarantee that He will see us through as a much better alternative. But, by following Biblical wisdom – and developing smart and Godly financial habits early on in life – you are on a pathway to financial success.
Sincerely your older self,
Bob
