When Dan Palmer from Pennies & Dollars approached me about contributing ideas for his post “What you wish you knew about personal finance when you graduated high school“, I knew I had more to say than just a little contribution. I graduated class of 2002, 15 years ago. His prompt has brought some memories flooding back.
Today, I’m going to try to sum up some of those memories into a list of lessons I’ve learned since but wish I knew when graduating high school. Hopefully, these lessons can help others graduating this year and in the future to not make the same mistakes I did. By all means, check out this post, but check out Dan’s post as well to see what others have said as well!
1) Don’t chase the newest things.
The newest things always look so appealing, don’t they? When I first graduated, I was always trying to get the best of things, best phone, best computer, best this, best that. By chasing the newest things, I was throwing away a ton of money that I needed for other, more important things like college and living expenses.
One of the things that I remember purchasing was an iPhone. I remember getting it and feeling like I had made it because I had “the most powerful phone at the time”. This feeling was only fleeting since a new phone came out that fall and my phone was left in the dust.
Another example of this same thing was when I got a credit card to purchase a TV to fill my apartment with the coolest gadgets. It was a very nice tv, but I’ve since replaced it with a TV for less than 1/3rd of the cost. I mainly keep the old tv because of how much it cost and that I can’t bear to part with it. Also, it’s a good reminder of my stupidity of buying such expensive stuff that didn’t appreciate in value.
2) Debt is not a tool for consumer items.
After high school, I used a credit card to purchase an awesome (at the time) new Sharp Aquos 32″ 720p flat screen tv for $1,500. It was a really nice tv and I still have it to this day. However, I purchased it the wrong way, putting it on a credit card without a plan to pay it off. It ended up starting a spiral that we didn’t fully dig out of until 2013.
Another story was when I financed dishes at around 25% interest. That was a doozy!
I’ve since learned that debt is not kind. It isn’t my friend. Debt steals and punishes if you don’t play by its rules. Removing debt or not taking on debt is a great way to free up your biggest wealth building tool, your income. If you have more of your income to give, save and spend after paying your main obligations, you’ll be able to build margin much faster and grow your wealth. You can’t do this when you are buying things with debt. Save up and pay for things and you will get a better product, have less buyer’s remorse and slow down lifestyle creep more.
3) Go to college debt free.
After high school, I had enough sense to go to community college because I didn’t save enough up to go to any other type of school. I wish I would’ve even possibly taken a year off to work and save up more to go debt free. I ended up taking out a loan for some of my schooling that I was paying off with interest. Start early and save up to go to school. If you don’t have anything saved, look into your community college to start getting your general education credits. Work as much as possible to get through the first couple years debt free while solidifying your plan.
4) Living on your own is expensive.
When I finished high school, I had some sense as my parents had groomed me to know that I would be living on my own soon and I should have a plan. I wish I’d spent more time living with room mates and building an emergency fund before moving out. I had started to collect many things to move out with but didn’t have much in the way of savings.
If your plan is to move out right away, have a solid emergency fund and a working budget. A budget that will still have margin once you are paying for your living expenses.
Saving is very important to moving forward.
When I graduated school, all I knew was I wanted to go to community college and to get a job. I didn’t live on a budget and I didn’t have the habit of saving money. If you want to succeed in the real world, you need to plan to save for the future. Whether an emergency fund and/or into retirement, start as soon as you can! It will be easier the earlier you start and compound interest is amazing working in your favor!
Graduating high school is an amazing time. The graduation parties, life changes, personal development changes. It’s hard to keep up with it all. However, learning from others that have made mistakes is a great way to learn quicker. That is, if you can pull yourself off the mountain thinking you are ready to take on the world. I thought I knew everything when I graduated, so it’s tough! By humbling yourself and at least taking advice from others into consideration, you may dodge some of these tough lessons!
You are the future of the world and you will help to shape the future. You will be helping to run this country and be solving many more problems in the future. I have faith our future generations will succeed and thrive.
I will leave you with one of my favorite quotes from the Dr. Seuss book, “Oh, the Places You’ll Go!”: