One of the interesting things about getting older is that we tend to have opinions about what would be good decisions for people younger than us. It seems like this is especially pronounced the further removed we get from the age bracket we’re talking about. At least that’s how it is for me.
It can be easy to look back and consider what we could have done differently, and many people seem to do that with money decisions. Now that I’m a parent of two young kids, I also look at moves people can make when younger. While my kids are small, I look to the future and think about what would be good for them and others when reaching their 20’s years from now.
I had a conversation recently with a friend of mine, the same age as me and also a parent of young kids, about money moves that would be smart for a 20-something out of college. We both went to school together, and had similar beginnings to our career. Much that we do is in parallel, with the difference being that he ended up really being a star in his field and has achieved a measurably higher level of financial success as well. Thus, we have developed a different view of what people in their 20’s might consider doing upon graduating.
His View – Take Risks and Swing for the Fences
Now, keep in mind that he really didn’t do this himself. He didn’t take big risks, and never started an entrepreneurial venture.
That being said, his life experience to date has given him the opinion that while he’s been quite successful to date – and he’s justifiably proud of it – a smart person with high upside should take risks when younger. More than that, he thinks that a risk-taking mindset can be applied to different areas of life.
For example, he would suggest trying to learn as much as possible in a short amount of time after graduation in an entry-level position. Ideally, this would be in an area of passion. Then, start your own business and put 100% of your effort into truly making it work. If it doesn’t, accept the failure and learn from it before moving on to the next venture. Eventually, your cumulative failures will teach you lessons that will allow you reach big success with one of your ventures.
He also advocates traveling as much as possible when younger, dating as much as possible and not getting hitched in your 20’s so you can hold out for the optimal person. This is just a side note not directly related to money and career, but adds context to this viewpoint.
Again, he didn’t to this – worked a corporate job, got an MBA, got married in his late 20’s, etc. However, it’s what he thinks would be smart for someone in his or her 20’s now that he’s older Go for broke when younger and try for the best with everything, knowing that you run the risk of striking out too.
My View – Focus on Saving and Investing as Early as Possible
Let me preface this by saying that if there is a time to take risks, it’s probably in one’s 20’s.
Nevertheless, there is also something to be said for getting off to a strong start and building a strong foundation. To me, excessive risk-taking can have negative consequences that don’t manifest themselves until people are much older.
I’d say it’s smart to invest in your career when younger, and focus on that as your primary source of income instead of getting obsessed with going for broke or handling a collection of side hustles as the main way to make money. Build your career, nurture it, and then you can have the cash flow and foundation to take on side hustles or bigger risks later.
I know people have that have taken different paths and approaches with money, a few at extremes and most in the middle. At the extremes – and I say that based on society’s view of what is “extreme” – are people who have lived for the moment and those who really tried hard to save. The latter included a few people who did well in school, got advanced degrees, and also lived at home for a few years after college to save money. They also avoided expensive cars and other traps, while working hard to grow income through their careers. Basically, these people saved early and often while avoiding debt like the plague.
Ultimately, these are the people that seem to be really flourishing and living with the least stress once they’re well past their 20’s. Their investment in their career, and serious focus on saving money right after graduation, put them in a good position down the line after the money compounded.
That’s what I think works, and makes the most sense. Eventually, with a foundation in place, you can take more chances later on with less downside. Delayed gratification would seem to provide a better lifetime value, as long as someone can avoid temptations and peer pressure when starting out.
What do you think?
There is a middle ground of course, but I’m curious which point of view you lean toward:
- “Take risks, fail and fail more until you succeed when young, while being unafraid to spend on life experiences”
- “Focus on building a career, avoiding debt, saving as much as possible by delaying gratification”