I’m surely not the only one who looks back at my youth and asks, “What was I thinking?” My list is long and undistinguished, and I’ll reserve these “teachable moments” to only finance-related matters today, for all of our benefit!

1. Delay gratification:

I need look no further than my wonderful 14-year old daughter for a reminder that materialism, fleeting though it may be, is our culture’s siren song. My vice: 1970’s-era Toyota Landcruisers. I was hell-bent on having a project car I could rebuild into a daily driver. Don’t get me wrong; more disciplined and less naïve twenty-somethings can pull this off. Thanks to an unhealthy cocktail of ignorance and stubbornness, I poured more time and energy into that money-pit than I care to admit. Finally forced to buy another, far more practical car while my “Cruiser” was in the shop (again), I realized my Cruiser owned me rather than the other way around. I ended up selling it for half of what I had into it to purchase a reasonable family car!

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The lesson:

We need clothes and cars and homes to survive, but by convincing ourselves that “wants” are “needs” we overextend ourselves what truly necessary, stagnating our progress towards long-term financial goals.

2.Consistently contribute to retirement:

Forcing ourselves to save on a consistent basis has a very real effect of decreasing our disposable income and decreasing competition for those dollars. My income level was typical of most: earnings increased as experience and wisdom compounded, meaning that Roth contributions at lower income tax levels take advantage of the income tax arbitrage available to young, disciplined investors. Deferral would not have been nearly as advantageous as later earning years, but most importantly, time is an investor’s friend on both a mathematical and also psychological level. My financial obligations were minimal: a small car payment, rent, cell phone, etc – I had few, practical excuses to not dollar-cost average into a Roth IRA on a consistent, monthly basis.

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The lesson:

Forcing ourselves to save on a consistent basis has a very real effect of decreasing our disposable income and decreasing competition for those dollars. Automation is typically the most effective and least painful means of saving money.

3. Invest in yourself:

At 25 years old, I had ample time to continue formal education by taking advantage of education benefits in the military, but I didn’t. Investing in professional development can result in both tangible and intangible returns, not least of which can be higher earnings potential. As a financial planner, I encourage clients to delineate between “good” and “bad” debt.

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The lesson:

While more formal education isn’t always a no-brainer, pursuing higher education opportunities can provide significant increase in earning potential and distinguish a resume in a competitive job market.

In summary, I’m sure we could all relate to some degree with mistakes made in our youth. If you’re 25 and reading this, you’re one step ahead of where I was! If you’re 40 and reading this, the great news is that it’s not too late to get started on a plan! If you need help formulating that plan, I look forward to speaking with you about how I help clients define and achieve their financial goals.

Investment advice and financial planning offered through Financial Management Inc., a Registered Investment Advisor.