When people look at me, they tell me I’m lucky…
This post has been inspired by Tawcan after he wrote “Weird things I did to save money in my 20’s”. While Tawcan was very good at saving money, being frugal in his 20s, I’ve developed another skill. One mistake I made was to not developed frugality at the same time I was developing the ability to monetize my young years. This would have been the perfect match! So if you are already into frugality, I’ll share with you a list of things I did in my 20s to make my life more comfortable today.
#1 Always have more than 1 source of income
I recently wrote about how I have always kept 2 or more active sources of income. While still in college, I had 2 different jobs to make sure I was A) always working and making money and B) keeping my independence from my employer. However, I quickly realized that working for the Man wasn’t the best way to earn good money. This is why I kept my most lucrative job (delivering bread) and started a small computer service company with one of my friends. It lasted while I completed my bachelor’s degree and I made enough to have all techno gadget (including a desktop and laptop computer + internet) for free during those 3 years. Then, I started working in a financial firm, kept my delivering bread side gig on Saturdays and started to blog to start an online source of income. People laughed at me when I told them I would be making money from my blog. Back in 2006, other bloggers told me that once I reach $250/month, I would call it a day. Well… our venture now generates that amount per day (this is an “in your face” to all the dream crashers!).
Having more than one source of income is probably the best thing I did during my 20s. I had the energy and the motivation to keep this structure rolling while building a solid financial future. The fact that I have always been 100% independent from my employer also helped me make choices based on my values and not on the amount of bills I had to pay at the end of the month.
#2 Work on my employability
I owe this lesson to my first manager. He told the me the most important thing about work there is; always improve your skills. Thanks to this guy, I earned my Certified Financial Planner title, got my broker’s license and finished my MBA with honors. This guy helped me get all the promotions I had over the past 15 years as he put me on the fast track. Another piece of advice he gave me still resonates with me each day I come to work:
“If you want another job, show people you can do it. Work as if you had the promotion title you want, accomplish the work and do this extra work for free”.
When it’s time to hire someone for this promotion; you’ll be the first in line since your manager will already know that you can do the job. In the meantime, you are on the fast track in front of everybody patiently waiting to get their chance to shine while the could have been shining since the very first day.
It’s funny how people think that working for a good employer is a safe choice. It isn’t. You have absolutely no control on how the business is run and management’s decisions could hurt your own status. It is not rare to see layoffs because the company is not doing as well as it should. Then, millions of people lose their jobs each year not because they are doing sloppy work, simply because this is how capitalism works. If you work on your employability, you will become a key element at work and they will keep you. In the best case scenario, you will go from promotion to promotion and in the worst case where your employer shuts down the entire company, you will receive phone calls from headhunters and you will not remain jobless for long.
#3 Use leverage according to my budget
I’ve always been a huge fan of leveraging. You probably already know my story about how I borrowed $20,000 on my line of credit to start investing and built a $50,000 cash down payment for my house in three short years with this strategy. I’ve also borrowed $25,000 to buy a piece of land which I sold for $32,000 in less than 2 years. A few years later, I remortgaged my house for $30,000 to buy a website which we sold back 9 months later for more than double this amount. I wouldn’t be able to leave for a one year sabbatical across America if I hadn’t take such risks.
However, I do not advocate using leverage to anybody. Borrowing money always comes with the risk of reimbursing your loan. If the asset you buy doesn’t generate the expected return, you need to know if you can afford to repay your debts in the first place.
#4 Start investing at a young age
The first stock I bought was Power Corporation (POW.TO) at the age of 23. I had plenty of time in my 20s to make investment mistakes with small amounts. During my 20s, I made some very good moves and some very stupid. It was a blessing to learn with a few thousand instead of a few hundred thousand!
In my early 30s, I was able to invest wisely and build a good nest egg for my age. My portfolio will benefit from the most powerful financial concept in the upcoming 30 years: compounding! Those who start investing at the age of 30 or 40 miss a lot of the compounding effect.
Besides my retirement account, I also benefit from a defined pension plan from my employer. If I was to quit tomorrow morning, I would get its current value to be added to my own retirement account. If I want to reach the one million dollar mark by the age of 65, I would only have to invest about $3,000 per year. This is how strong the power of compounding return is!
#5 Work hard, even when it doesn’t pay
I’ve always been a hard worker and I realize today that I didn’t always get paid immediately after my work. This is especially right when you work for yourself developing a side income. At first, I wouldn’t even think of calculating how much I was making per hour when I started blogging. This was probably near $0.25/hour ;-). Today, I can say this is more close to $50/hour. I expect this hourly rate to climb higher during my trip as I will be more focused and can develop many ways to earn more money by working 30 hours a week on my sites.
Working hard is always good even if you don’t get paid for it. While being committed, you also gain confidence, you learn things and others have a good opinion of you. In the future, this always open doors that will eventually help you generate more money.
Now the next step!
In my 20s there is something I didn’t realize; and this was that making money is not everything. If you can’t save it and spend as much as you earn, you are not getting any better! My next step is then to reduce my lifestyle and increase my savings rate. My way of doing it is also to keep increasing my income, but not my expenses!