Dear 30 Year Old Me.
“Money. Money. Money. Lots of Money. It’s a rich man’s world”
Abba
So much has been written about money and I think that as I write this letter – I will come up with more popular (and some might even be unpopular) notions about money. If I recall correctly (and being 41 does clog up my memories so I don’t always recall correctly) – at this age of 30 – you have made peace with money. This is difficult for you to do because you grew up being educated by priests and nuns who made you think money is dirty. You also grew up not having a lot of money so your relationship with money in the past is as complicated as that mathematical equations you were solving in Calculus. The thing is along with this notion of money being a taboo subject – you realized that with the good money you earn, you are able to help out – not just yourself but your family. You have made peace at the thought of appreciating the abundance that has followed you ever since you started earning money. So I’d say, good for you and your healthy relationship with money.
You will continue to earn good money in your job(s). You’ve been blessed with so much talent that your bosses just recognize you by either giving you a raise or giving you a bonus. Thing is – as much as money comes to you constantly – you’re not very good at keeping it. I know that you want to be a millionaire – but at the rate you’re going with your expenses unchecked – it will take you a long time for you to be a millionaire. Remember that a wise man once said – “It’s not about the money that you earn. It’s all about the money that you keep.” Start keeping some of that money – so you can use it for a rainy day (and I hope that the rainy day doesn’t come with you dancing topless in a club singing “It’s Raining Men!”).
For someone like you, investments must come with you not being able to touch those investments – no matter what. So this can come in the form of real estate, retirement funds, stocks, bonds. You will always be liquid because of your job --- so don’t worry about sinking your money in these investments because the returns – when you reach my age will just be awesome.
When you reach the age of 35 – you will meet this hot young real estate broker. He used to do modeling but you will not recognize him – but when you meet him – google his name so you can find out that he’s a great catch. You and he will not hook up. You definitely like the way he looks but let’s just say that you wish you can have better conversations with him apart from him selling you the latest development that the company he works for is building. Listen to him – while you gaze into those big brown eyes. He will introduce you to two real estate investments that will make sense. The reason it makes sense for you is the fact that the monthly payments are well within your budget. There will be balloon payments every year – but it doesn’t matter because your bonuses will go to those balloon payments. In the end – after five years – you will be fully paid. No loans at all to take for these assets. Because of these assets, you will be able to claim that you are a millionaire. The key here is to never stop paying until you are fully paid. You will hear your friends come up with dire predictions for the real estate market because of what will happen in the US real estate market --- don’t listen to them. In the end – if you sink your money but you don’t get the property – that will be foolishness that will be too expensive to recover from. Listen to Mr. Chinito and buy those pre-selling properties – and stick with the investment – five years of paying for them is a short time compared to the years ahead when you will actually own these pieces of real estate.
You are also getting yourself up nicely for retirement. Thanks to your friends who introduce you to “Financial advisers”. Every month – for the next ten years – you will pay for a retirement-cum-insurance package. In fifteen years – that account will mature – and you will have a good sum of money for your nest egg.
Forced savings are also good for you. Actually – if you look at the things that I just mentioned – a good investment for you is one where you feel trapped in making them. You keep on writing the checks for it and when you budget your monthly expenses; you know that the money for those post-dated checks you have issued should not be touched. So going back to forced savings – if your current employer has an employee cooperative – you must sign up and deposit to it regularly.
One last thing about money – there will be things in your life that will be unexpected. Because of this, it will always be good to keep a healthy emergency fund. The amount in that emergency fund should be equal to 6-months-worth of expenses including the amount that is written up in your investments as post-dated checks). Save that money – don’t touch that money – until you really hit an emergency (or if you’re lucky an opportunity to make more money).
But all in all – because you have been generous with the money you earn – the universe actually sees you in favorable light. Invest for the future – but as much as you love money – don’t let your life revolve around it. There are so many things that life has to offer – that goes beyond what money can buy.
With much love,
The 40-something Year old you
(Blogger's Note - this is advice number 3 for the 30 year old me and was written as part of a really long letter found here.)
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