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What I wish I knew about money when I was 22

By April 23, 2012 No Comments
By Ben Sands – For additional insights, tools, and leadership resources, click here

Being “broke” is tough. I know from experience.

At 23, living in New York City, my after-tax take-home pay was $1600/month (from a salary of $35,000/year).  My rent at the time was $1300/month…so that left $300 for everything else.

$300 to cover all of my expenses. In New York City. It was brutal. 

My monthly allocation for food, booze, clothes, subway fare and everything else was the amount of money that friends at investment banks, law firms and consulting shops would drop at dance club on a average Saturday night.  Mine was the kind of discretionary cash position that forced one to find the bars that served free hotdogs along with $2 Pabst Blue Ribbons…

When I felt particularly cash-strapped, I remember being extra-motivated to “buckle down,”  and “crush it” at work. When I was 22, my strategy to achieve financial security was simple: work hard. And, if that didn’t do the job, work harder. That was all I knew how to do.

It wasn’t until my older brother sat me down to share some of his key “lessons learned” on personal finance that I came to realize that all of the hard work – the blood, sweat and tears – in the world couldn’t guarantee me lasting financial security if I didn’t understand what money is, how it works and what I would do with it once I had some.

It was a life-changing conversation and helped me to realize how important it was be to close the gap between what I knew about money – and what I needed to know. Consider this blog my way of paying it forward.


1.    Give the study of money the same respect you do your profession. Invest time in becoming financially “literate.”  Do not abdicate responsibility for your finances to “experts” – NO ONE will care for, or care about, your money as much as you do.

Too many people get simply overwhelmed by all of the investment options out there so they stick their money in a mutual fund and their head in the sand. You are SMART.  You CAN know enough about money to manage your finances effectively in your 20s – and when you make so much money that you need to hire a professional, you’ll be educated enough to be able to ask the right questions and manage them with confidence.

One practical idea for getting started: Read the Wall Street Journal everyday.  Get to the point where you can read and understand every section in the paper.

2.     Figure out how much you really need. One of my favorite books is Daniel Gilbert’s “Stumbling on Happiness.”  Gilbert, a Harvard psychologist, talks about how ineffective we (humans) are at predicting how happy we will be when we achieve certain goals.

Many of my clients come to me exhausted and disenchanted – after working 70-90 hours/per week to achieve a lofty financial goal, they find something is missing once they get there. According to Gilbert, this is common: most people find that they are far less satisfied when they reach a financial milestone, than they expected to be when they set out.  In fact, according to a 2006 study by Nobel Prize-winning economist Daniel Kahneman entitled “Would You Be Happier If You Were Richer?” most people report virtually no increase in “life satisfaction” once your income exceeds $90,000.

The truth is, there is no “easy” way to make $90,000 in your 20s. Banking, sales, consulting, law…all can get you there, but you will work your tail off to do so.  And even if you do make it, you may still feel PBR/free hot dog poor – especially if you’re living in New York, San Fran or London.  The key to a “6-figure” quality of life is the ability to live, work and spend according to your personal needs – not your capricious wants.

3.     Start giving.  In a previous post I mentioned my reading of Titan, a biography on John D. Rockefeller.  One of my most important takeaways from that book was Rockefeller’s habit of giving 10% of his annual income away every year – a practice he began well before he ever made serious money, but which he continued (and exceeded) as he became one of history’s wealthiest men. He believed strongly that if you were in need of something (money, love, forgiveness, etc), you should first look to give it.

John Wooden, the famous UCLA men’s basketball coach put it a different way: “It’s only what you give that you get to keep.”  Start getting into the habit of working to give and create wealth for others…and you’ll find that your own wealth (and happiness) grows in the process.

REGRET FREE PERSONAL FINANCE | Advice from 30-somethings on money in your 20s

Below, some additional advice on money from some very smart 30-somethings who were just as broke (and driven) as I was; and learned these lessons the hard way so that you don’t.

1.     “Understand what it is to live within your means.  Live life more with less… If you need to pay for something via credit card (non emergency) then that means you cannot afford it. Reset your spending expectations.”

2.     “If you want the nice things your parents had, you’ll need to make sacrifices today to get there. Doctors, lawyers, investment bankers, etc … all are generally wealthy professions that required significant up front sacrifice and a ton of hard work. Know what you are getting into, and why you are doing it.”

3.     “You don’t need that much money to live as a single person. Moreover, one can live richly and luxuriously in an environment with a low-cost of living. In Buenos Aires, I indulged on steak and wine for two on a nightly basis at an average cost of $25. Que rica es la vida!”

4.     “You shouldn’t feel ambivalent about making money,but think twice about doing things that don’t matter to you.”

5.     “The yellow brick road is not always the best road.  In your 20s you have the ability to take

risk that might not be afforded to you as you get older and build a family.  Given that, find an activity/job that truly fascinates you; as opposed to the one that pays the best. This will lead to far more fulfillment in the long run.”

6.     “Working to travel is a legitimate life choice. When I backpacked around the world, I met many habitual and lifelong travelers. People in their 30’s, 40’s, 60’s – almost all from outside the US. Some of them had jobs that allowed them to check out for long periods of time. Some of them had jobs they didn’t much care for, saved money, then spent a month each year in some far-flung part of the world, living a different life. At times, they shared with me, balancing the desire to travel with the need to work, was a struggle. But at least they had that struggle.”

7.     “Build good habits when you’re young, because they’re harder to change when you’re old.  Spend time in your early professional career making time for working out, learning about money and leading a healthy lifestyle.  That only becomes more challenging as life gets more demanding.”

8.     “Don’t focus too much on only what you can “measure” (e.g., grades, money, weight); it’s the softer stuff that really counts.”

9.     “Keep balance in your life. Leisure (hobbies, spiritual), Health (exercise, eating habits), Business (work), Finances (money mgmt), Family, Friends and Personal (your internal voice). Don’t neglect any of these areas.”

10.    “Don’t get lulled into thinking that because your friends can afford expensive dinners, trips and bar tabs, you can too.  You most likely can’t.  Keep it up and you will find yourself back to living with your parents sooner or later.”

RF Personal Finance - CoverNOTE: In a few days I’ll be releasing my first book on money Regret Free Personal FinanceClick here to get a FREE preview copy.

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Ben Sands

Author Ben Sands

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