photo by 401(K) 2013 Flickr

I Should Have Saved Less Money When I Was Younger

advice to a young investor

I’m not rich, but somehow I believe I saved more money than I should when I was younger, which I think was a huge mistake.

The mistake

My main mistake was saving money when I was still barely making minimum wage.

If you are close to the bottom, are healthy, young, and schooled; chances are you will only get better given time. Your intern salary will probably double in a few years after you get hired for a full-time position.

When you are young, every penny counts. You are supposed to spend all the money you make unless you want to save it for a trip, gadget or something else that you value more. You should save it wisely.

150% of nothing is still nothing

If you have a small bucket of money it doesn't really matter if you make 5% or 50% of interest per year — 150% of nothing is still nothing!

It’s wiser to invest on your studies and career than to try to become rich betting on the stock market. It’s a better investment of your time and resources. — Luckily that is something I realised very soon, since my investments were making way less than I could make as a freelancer and required roughly the same amount of time/effort.

Time and health are the most valuable resources, spend them wisely!

Saving is important but there is the right time for everything

Having money in your bank account opens up many opportunities that wouldn't be possible otherwise — like starting a business or doing a last minute trip with your friends. But I just don't think you should care too much about it during your early 20's. I guess your 30-40's would be a better time to actually start accumulating wealth (for retirement and kids). There is a big chance your income will reach its peak around your 40's, so that’s when you should save more.

Also don't forget that many companies borrow money to accelerate their businesses. You don't need to have the lump sum to start a company or to buy an expensive good, as long as you do it responsibly.

Maybe one day it will pay off

Your mileage may vary, but so far I believe it was the wrong choice since I did not find any better use for the money than what I could have done with it 5-10 years ago. — A few hundred dollars when you are 15 years old is a lot of money, I could have bought that Playstation 2 and done another trip through South America during college…

But it might never happen

Don't save money to enjoy life when you are older, it might never happen (my mom died at age 45, my dad at 62). That doesn't mean you should live life like there is no tomorrow, just that those who focus too much on the future might not enjoy the present as much.

Luckily I still traveled to some cool places, bought many things I did not need, and enjoyed a lot. It could have been way worse if I was more serious about it.

“My goal is to save 1 million dollars, and yours?”
“Mine is to spend 1 million dollars” — Johnny

Enjoy your early 20's, chances are you won't ever be as broke and healthier than you are right now. #yolo


PS: Unemployment is a big issue in many countries at the moment, so saving some money for emergencies is not such a bad idea. Just don’t think that twenty bucks will make you any richer in the long run.