Financial Advice For My 20-Year-Old Self

Graduating from university in my 20s, I was jobless, debt-ridden, and living with my parents. I've come a long way since then but getting here wasn’t easy. Here are the financial lessons I’ve learned from surviving my twenties.

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If my 25 and 41-year-old selves met in a Back to the Future time warp, I’m not sure if they would recognize each other.

After graduating from university, my future didn’t look so hot. The competition for decent jobs in Toronto was fierce. I struggled to find well-paying work, despite earning a “useful” Master of Social Work degree. Swimming in debt and my bank account nearing $0, I packed up my apartment and moved in with my parents. Ugh, right?

I’ve come a long way since then. At 41 years old, I own a thriving business, have maxed out my RRSPs and TFSAs, and own two properties. In terms of financial success, I’m doing just dandy. But it took making a lot of money mistakes to get here; but ultimately, these financial blunders help improve my money management skills. I’m happy to share a few financial lessons I’ve learned from surviving my twenties.

1. Sometimes our family and friends may be wrong…especially about money

As much as they love us, family and friends may have wise words and good intentions, but sometimes, don’t know what’s best for us. And that applies to their personal finance advice.

Case in point: after lamenting about my student loan debt, my dad blamed me for choosing an impractical program that didn’t lead directly to a lucrative career path. His advice? Go back to school for computer science (because Bill Gates would obviously hire me right away).

My dad didn’t get my financial reality and it’s no wonder. At age 25, he had a well-paying job with a defined benefit pension, a house, two cars, and no student debt. It’s no wonder he struggled to understand the realities of my generation.

If I could go back in time, I tell myself to ignore Dad’s (well-meaning) advice. Don’t get another degree or apply to work at Microsoft (spoiler alert: I didn’t). Get creative and come up with Plan B that puts your skills and education to good use.

2. Do what it takes to get out of debt

Sinking in debt, I had to act pronto before the collection agencies descended upon me. Feeling desperate, I expanded my job search outside Toronto.

That’s when I stumbled upon my dream job. Not only was the work interesting, but it offered an above-average salary, an expense account, and more responsibility than any entry-level job that I could expect in the city.

The catch? The job was in Fort Frances — a small town of 8,000 residents in Northwestern Ontario, a region 1,600 kilometres north of Toronto. It had no movie theatre, one Tim Horton’s, a handful of restaurants, and lots of lakes. The nearest city was five hours away by car on a remote highway prone to moose sightings.

Despite being a die-hard urbanite, I accepted the job when it was offered. Everyone thought I was crazy (including my parents). But I was willing to take drastic measures to get out of debt.

As it turns out, it proved to be a smart move, as I earned good money and cut my costs big time. I rented a huge, lakeside apartment for a mere $550 per month. I gave up my mobile phone since cell service was spotty and I rarely dined out since there were very few restaurants. There were no concerts, clubs, or shopping malls so that sliced my spending too.

Most importantly, I aggressively paid down my debts in 18 months, including my student loans. That would’ve never happened if I stayed in the city, where rent would’ve eaten a big chunk of my paycheque.

The lesson here? Do what it takes to get out of debt. If that means changing your lifestyle, location, or life expectations, it’s worth considering.

3. Sock away the savings…

Looking back, I understand why I sucked at saving money.

Growing up, my family had no emergency fund. After the bills were paid, any leftover money was blown on “fun.”

It was a pattern that I repeated in my early twenties. I didn’t really budget or set aside an emergency fund. By the time I walked across the stage at graduation, my bank account was close to zero and my credit cards were maxed out. It was a really low time in my life.

The good news? I quickly turned this mess around in my twenties and became a lifelong saver. Once I was debt-free and gainfully employed, I started putting away a chunk of each paycheque into a high-interest savings account. I talked to a financial professional and planned for the future. I even contributed to an RRSP for the first time.

If I could go back in time, I’d tell myself to always pay myself first. Ignore that jacket at the mall and stash that extra cash into a savings account instead.

4. …Start investing now!

Speaking of savings, one thing I’d like to tell my 25-year-old self: start investing now.

At the time, my knowledge of the stock market was limited to high school history lessons about the crash of 1929. Investing sounded risky. Better to keep my money safe in a GIC or savings account, right?

Now I know better. Had I regularly invested $400 per month throughout my 20s and 30s, my portfolio would likely be hitting six figures by now. Decades away from retirement, I’d also have ample time to recover from any market downturn. Plus, “risk” can be buffered simply by building a risk-appropriate, diversified portfolio. I also know there’s a risk to not investing: inflation can eat away at my savings if it’s stuck in a low-interest savings account.

So, what would I say to 25-year-old me? Tap into the magic of compound interest! Move your savings into an investing account pronto. After all, the early bird gets the avocado toast.

READ MORE: Compound Interest Explained

5. Forget the house (for now)

At 25 years old, I was obsessed with buying a home. A few years after I started working full-time, I scraped together a small down payment to purchase a tiny one-bedroom condo in Toronto. I felt the pressure to get into the hot Toronto housing market ASAP before housing prices went up even more.

Almost fifteen years later, I second-guess this decision. To make the purchase, I had to borrow from my RRSP and couldn’t afford to invest for several years. But at the time, I rationalized buying real estate as a good investment.

It was a good investment, but historically, stocks tend to increase in value faster than real estate, as well as produce higher-than-average annual returns. Of course, I didn’t know that in my 20s. If I could go back in time, I would tell myself to chill out on the house-hunting frenzy. Focus on building a risk-appropriate, balanced portfolio instead! You’ll reap the rewards later.

READ MORE: Stocks vs. Real Estate

Final thoughts

Let’s face it: no one is perfect, and everyone is bound to encounter money mess-ups. The important thing is to learn from your mistakes. If sharing my financial life lessons helps you move forward and make smarter decisions, I’m glad for it. Your 80-year-old self will thank you!

Want more candid advice? Watch Himesh Patel, ETF Strategist from Fidelity Investments, give his financial advice to his 20-year-old self.

Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in ETFs. Fidelity’s All-in-One ETFs pay indirect management fees through their investments in underlying Fidelity ETFs that pay management fees and incur trading expenses (in addition to the indirect management fee, the Fidelity ETFs will also pay indirectly the operating expenses of the underlying Fidelity ETFs). Please read the ETF’s prospectus, which contains detailed investment information, before investing. ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated.