I’m in my mid twenties and I am about half way through saving for my house deposit. If I could go back in time and talk to my 18 year old self, fresh out of school, embarking on an unpredictable journey, I’d have a lot I’d like to warn myself about: certain people I shouldn’t associate with, jobs I shouldn’t waste so much time in and chances I should have taken. One of the biggest things I’d like to talk to myself about is the fact that in a few years I will wish I had been better with my money. At the time, buying a house wasn’t even on my mental radar and now that I want to buy a house and get a mortgage, it’s still going to take me a few years to finish saving my deposit. Here’s what I would tell myself:
1) Spend Less
I bought so much stuff during my late teens and early twenties, much of which I would cringe at now. It was not unusual for me to drop £100 on a night of drinking, only to spend the following day(s) feeling miserable and sorry for myself. I hate to think what all of that money added together would equate to now. While I’m glad I had fun – a lot of it – I wish I had found a better balance earlier in life as this would have completely changed the position I am in today.
2) Get On Board With Compound Interest
Although the interest rates are pretty average these days in terms of saving accounts, back when I first started earning my own money they were pretty good. Compounding interest is a great way to maximise your savings with very little effort. Over the course of 8 years I could have made a lot of ‘passive’ income through compounding interest.
3) Property Prices Are Gonna Shoot Up
In the UK, for example, many property prices have shot up dramatically, meaning each year getting into the property market seems to become a little less attainable for those of us who are just starting out. The earlier you can get in, generally the better.
4) Buy Young and Share
While I’m not encouraging anyone to rush out and buy a house too young, I think there are tangible benefits to buying a home young, such as the fact you’re more open to having housemates who can help pay off the mortgage. In the next few years I’d like to think about having my own family, so I don’t have that many years of wanting to live with paying tenants left – which is a bit of a bummer. The more aggressively you can pay your mortgage off, the faster you can own your home completely.
While I don’t regret anything I’ve done in my life, if I could go back in time I’d certainly do some things a bit differently! What would you tell your 18 year old self about money?