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Inspired by my favourite frugal vlogger, Budget Girl, I’m sharing with you the 5 money lessons that I wish I knew at 18 years old, which would have put me in a MUCH better financially position in the 8 years that have followed.
ONE: I wish I knew that my decisions at 18 would have a direct impact on my life at 26 years old.
When starting university at 18 years of age as a not so bright and naive student, for some reason I never made the connection between what my day-to-day actions were and how they would still affect me 8 years later. I had imagined that once I graduated from uni, I would suddenly have a well-paying, dream career and not have to worry about money. However, I made no steps to forward plan at the beginning of uni, didn’t apply for internships and wasted may years not taking the baby steps to make sure this ‘dream’ career would actually eventuate. I never imagined that my life would not come close to the successful, career-driven, perfect life I had expected to automatically happen with reaching post-graduate adulthood.
TWO: I wish I knew that small purchases add up to cost more than the big ticket items.
Still to this day I struggle with cutting down the small purchases like take-away coffee and take-away lunch. I wouldn’t question spending $15 or $10 there however would sit thinking and analysing whether a $1000 plane ticket was worth it. Without having a way to track my expenses at the time, I didn’t know that I was blowing thousands of dollars on tiny purchases that didn’t add that much value to my life and could easily afford the big ticket items that I had dreamt of and valued.
In addition to this, starting uni meant making new friends, having new experiences and enjoying the new found freedom that comes with being 18+. This also meant going out and splurging on these experiences. While I had an amazing time at uni, I wish I cut down on the small, insignificant social outings (like bringing lunch to the cafeteria instead of buying terrible cafeteria food) so I had enough money saved up for the bigger, more important things.
THREE: I wish I had the foresight to see the compounding benefits of investing at a young age.
As a child my dad tried to encourage me to invest by having me set aside money to invest in shares which he would guarantee would not lose (i.e. he would take the losses if the value dropped). At the time, I preferred to spend my money on movies, clothes and dining out with friends and didn’t value or appreciate the advice and learning he was giving me at a very young age. Looking back, I wish I had listened to his advice, started investing at a young age and understood the compounding benefits of investing small amounts and watching it grow during one of the best bull markets in history!
FOUR: I wish I saved more when I was living with my parents and not paying rent.
While this loops back to lesson two that I wish I spent less on the little things and more on the big things, I wish I saved more when I was living for free with my parents, not paying for rent and bills and 100% of my income was discretionary. While my parents encouraged me to use this time to take advantage of free accommodation and save, my priorities were enjoying myself with little daily purchases instead of saving for the big ticket items whether they be travel, investments or a car. Until I moved out of home and then over to Sydney, I now realise that most of my money is spent on feeding myself and putting a roof on my head, instead of savings.
FIVE: I wish I had discovered my financial purpose earlier in life.
Since starting this blog, for the first time I’ve found motivation and reason why I need to save and invest which is to achieve a higher goal of financial freedom. At 18 years old, I didn’t have a concept of ‘the real world’ and what that meant, therefore didn’t save for bigger things. I assumed that freedom came with adulthood and income, however most of adulthood is taken away by working the corporate ladder and pleasing a boss to pay the bills. Now I have a greater motivation to saving and be frugal day-to-day.
In addition to having a better motivation to save, having a financial purpose has motivated me to educate myself further. In my spare time I research economics and investments, apply these learnings to my investments and have a greater understanding of what I am investing in and how this is affecting my own net worth.
What are your money lessons that you wish you knew earlier in life?
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xx Miss Piggy
Cover illustration by Jenny Walton