Your 20s are far from simple … especially when it comes to your finances. Even the some of the wealthiest, most successful people didn’t escape this decade without making one (or several) money mistakes.
We asked a handful of self-made millionaires and billionaires, CEOs and entrepreneurs, and best-selling authors what they wish they’d known about money from the get-go.
Here’s what they had to say:
- Cindy Ord/Getty Images for Cosmopolitan
Learn the concept of delayed gratification
Kat Cole, president of Focus Brands:
“What I wish I would’ve known is more principles and practices around saving and consciousness about how I was spending my money. And the concept of delayed gratification, which I was really not good at.
“When you’re making a bunch of cash you can do whatever you want, whenever you want. … If I had instilled the practice of ‘Yeah, I want something, but do I need it? I’m going to wait,’ one of two things is going to happen: Either the desire for it will go away, and now I’ve saved that money, or when I get it, I’m going to be much more grateful for it – and maybe it’s on sale at that point.”
- Ethan Miller/Getty
Have a cash cushion
“Before investing or starting a company, make sure you have enough money saved for at least six months to pay bills or anything else that might come up financially. It’s important to have a cushion of six months financial back-up before you invest or if something doesn’t work out in your favor.”
- Michael Buckner/Getty
Learn to manage your credit cards
Mark Cuban, billionaire entrepreneur, investor:
“[I wish I knew] that credit cards are the worst investment that you can make. That the money I save on interest by not having debt is better than any return I could possibly get by investing that money in the stock market. I thought I would be a stock-market genius. Until I wasn’t.
“I should have paid off my cards every 30 days.”
- Getty/Jemal Countess
Skills are worth more than a job
Tim Ferriss, angel investor, best-selling author of “The 4-Hour Workweek“:
“In your 20s, optimize for learning, not earning. Work directly under or with master dealmakers and acquire skills. This is particularly true for negotiating and hard skills, like coding.
“What would you rather have: $20,000 more per year in your 20s, leading to making $100,000 to $200,000 a year in your 30s, or a lower-paying job from 20 to 25 – but one like a real-world MBA you’re paid for – leading to making millions in your 30s?
“It often comes down to prioritizing skill acquisition over immediate, post-college earning. McKinsey or Goldman can be seductive, but it’s easy to get trapped in a 20-plus-year path of paying for a bloated lifestyle that is always a bit more expensive than the year before. Serfs can become self-made kings, but consultants tend to remain consultants. The only true job security is a superior skill set.”
- Cindy Ord/Getty Images for Cosmopolitan
Create a nest egg
Sara Blakely, founder of Spanx:
“It’s really important to save money and create a nest egg, become comfortable for yourself with what the nest egg is, and don’t touch it. Leave it there. I always had a portion of my paycheck put into savings, and that was an easy automatic way.
“So if employers offer that, I would suggest that people sign up for that because then it’s kind of out of sight, out of mind. When I started Spanx, I kept my day job for the entire time I pursued it. I didn’t quit my job until I’d already landed Neiman Marcus and Saks Fifth Avenue. I was so careful, I [worked on Spanx] at night and on the weekends because I didn’t not want to have income coming in.”
- Courtesy of LearnVest
You need a plan for your money
Alexa von Tobel, founder and CEO of LearnVest.com, author of “Financially Fearless“:
“Not having a financial plan is a plan – just a really bad one! Given what I see as a general lack of personal-finance education, it can be all too easy to wing it with your money.
“I was lucky enough to learn this lesson while still in my 20s, so I had time to put a financial plan into place for myself – and start LearnVest to help people nationwide do the same!”
- Vivien Killilea / Stringer / Getty Images
Do something you love instead of chasing money
Blake Mycoskie, founder, chief shoe giver of TOMS:
“In my 20s I wish I knew that the best advice for any person is to follow their passion as opposed to chasing money. I’ve seen time and time again that the people who foster their true passions and true callings are the ones that end up the most successful.
“It’s hard in your 20s not to worry about money, but to focus on making sure you do something you love. Today, I feel like every time I’ve made a decision at TOMS that I’m passionate about and improves someone’s life, the company grows and makes more money.”
- Cindy Ord/Getty Images for Cosmopolitan
Be wary of credit cards
Joanne Bradford, chief operating officer of SoFi:
“My first job I worked at Macy’s, and they gave you a 20% discount, but the only way you got the 20% discount is if you charged it on the Macy’s card, and the interest rate was in the high 20%, so it wasn’t really a discount at all. So that was a hard lesson. I wish I would have understood the real cost of credit card debt. I quickly course-corrected on that and then understood the power of compounding.”
- Courtesy Warby Parker
Learn the skills that will help you advance in your career
Neil Blumenthal, cofounder and co-CEO of Warby Parker:
“Set yourself on a path to financial success. Focus on industries and companies that are growing. There will be more opportunities. … To create future opportunities, identify the skills that are required to do the jobs of your boss and boss’ boss and set out to learn those skills over time.”
- Farnoosh Torabi
Don’t accept every credit card offer
Farnoosh Torabi, personal-finance expert, best-selling author, host of the daily podcast, “So Money“:
“I would insist upon my younger self to be more thoughtful about credit. I opened up random credit cards in college just to win the silly shot glasses and tee-shirts. I opened multiple store cards to get the 20% discounts, all without really understanding the importance of paying bills off in full every month. As a result, my credit score suffered and I even got denied additional credit at one point due to a late payment incident.”
- Courtesy of David Bach
Bet on yourself
David Bach, best-selling author, founder of FinishRich Media:
“In business and life I would tell my younger self to ‘bet on yourself to win.’ You’re going to have big dreams against huge odds, with a goal of being of service to millions of people, and many people will laugh and tell you why it can’t be done by you (and they will all be wrong).
“And when it comes to the money, I would tell my younger self to pay yourself first – automatically – because the miracle of compound interest really does work, and when you’re in your late 40s you’ll be a multimillionaire because of it.”
- Clif Bar & Company
Understand the power of investing
Kevin Cleary, CEO of Clif Bar & Company:
“In my 20s, I wish I better understood the power of investing. At the time, I had fewer expenses, more free time, and a long investment horizon – it would have been the perfect time to learn about investing.
“While I was disciplined about saving money, I missed the opportunity to leverage my money over the long haul.”
- Courtesy of Nasty Gal
Money means freedom
Sophia Amoruso, founder of Nasty Gal, author of “#GIRLBOSS,” writes in her book:
“My adopted political ideals had let me approach money with an elevated level of distaste. I saw it as a materialistic pursuit for materialistic people, but what I have realized over time is that in many ways, money spells freedom.
“If you learn to control your finances, you won’t find yourself stuck in jobs, places, or relationships that you hate just because you can’t afford to go elsewhere. Learning how to manage your money is one of the most important things you’ll ever do. Being in a good spot financially can open up so many doors. Being in a bad spot can slam them in your face. And being broke gets old, so start making smart decisions now to avoid paying for stupid ones later.”
- REUTERS/Lucas Jackson
Money doesn’t make you happy
Matt Maloney, CEO of GrubHub:
“Money does not define success or happiness. In fact, if you are truly effective at what you enjoy, money usually follows your passion. Passion drives interest, which in turn drives focus and commitment. Both qualities are requirements for success.
“When given a choice between ambiguous paths, choose the course that will bring you the most emotional and intellectual satisfaction – not the most direct path to riches. Don’t be afraid, you can live a very full life earning far less than you think you need.”
- Dave Kotinsky/Getty
Know how much you spend
Jenn Hyman, cofounder and CEO of Rent the Runway:
“I think the number one thing you can do in your 20s is just have awareness of what your expenditures are. It will likely be the case that some of your expenditures are way higher than you allow yourself to believe.
“For me, in my 20s, I was spending 80% of my take-home income on clothing. I didn’t want to admit that. If you had asked me in my 20s, I never would have told you that, but that was the reality. And I wish I could go back in time and have a rational conversation with myself as to better ways to spend that money.”
- Courtesy of Adam Nash
Invest in your career and the money will come
Adam Nash, president and CEO of Wealthfront:
“I was fortunate to have been raised with a strong sense of the importance of saving and living below your means. However, it wasn’t until later that I learned just how much of your long-term economic success depends on your professional career.
“Knowing what I now know about the importance your career path has in determining long term financial success, I’m a huge believer that people in their 20s should seek out opportunities at later-stage, hypergrowth companies. When you think long term, the company you join is far more important in your 20s than the specific compensation or role. This is one of the reasons that we publish our list of Career Launching Companies every year on the Wealthfront blog.”
- Jason Merritt /Getty
Learn to manage the money you have now, no matter how little
Debbi Fields, founder of Mrs. Fields:
“Looking back now, I know that I would have greatly benefited had I initiated an investment strategy as a young adult. I was so busy trying to save every dollar and living paycheck to paycheck that the idea of wealth creation was never really a consideration.
“Not thinking bigger than my bank account was my error – I could have set up a simulated investment account, joined a club, or learned about the buying and selling of securities.
“The key to managing money and building a nest egg is learning how to manage small amounts and grow them wisely over time. It can start with pocket change and grow beyond anything you imagined! The key word here is imagined … You have to add a zero or two to your net worth and direct your attitude and financial strategy toward getting there.”