10 things I’d tell my 21-year-old self about money

Jo Dugdale, Manx businesswoman and founder of Chartwell Financial Planners, knows a thing or two about money. With more than 25 years’ experience in the financial services industry, Jo has gained a unique insight in how to responsibly manage your finances and reap the rewards both now and in the future. 

 Looking back, Jo wishes she had this insight when she was just starting out in her career, but now is in a position where she can pass on that experience and wisdom to others. We asked Jo to share any advice that she wished she could tell herself when she was 21, in preparation for a secure financial future. Let’s see what Jo’s top 10 tips would be…

  • Keep your core expenses low

Being a financial adviser would lead you to believe that I am obsessed with money. But the truth is, I don’t believe money buys happiness. What I do understand is that it gives you both freedom and choices, and it is what you do with those choices that makes you happy. 

By keeping your core expenses as low as possible from the outset, you can reap the rewards later on in life. 

  • Don’t spend simply because you can

I know you think you need that BMW you have your eye on….but after a couple of weeks, the novelty will have worn off and you will be left with one of two things: a huge monthly payment or debt, and both are going to become a burden and restrict your options as your circumstances change.

 By spending within your means, you can achieve financial flexibility. This will provide you with choices and strong prospects, so when that great opportunity comes along, you won’t need to think twice. Live by this rule, and you’ll be able to afford that dream car or house later down the line, without it becoming a big financial strain. 

  • Don’t let your age stop you from achieving your goals

Never be insecure about your age (whatever that may be), and try not to use it as a benchmark for your achievements. Some of the world’s most successful people didn’t make it until they were over 40, and some in their teens, proving you are never too young or too old to make a difference in whatever field you choose. 

You are the oldest you’ve ever been and the youngest you’ll ever be. Never forget that and you’ll be unstoppable!

  • Take a Risk

At 21, your confidence is at its highest level, perhaps even erring on overconfident! Don’t be put off because no one has ever done something before or you think you’re too young to take up a new opportunity, this is the time in your life where you can afford to take risks! If the risk doesn’t pay off, it’s not the end of the world, you still have time to progress in your career and earn more money.

  • Develop the habit of disciplined saving

Understanding the options that open up if you have a few quid in the bank can be truly life-changing. That job you hate? Not to worry, savings give you the freedom to hand in your resignation and scope out the next opportunity, safe in the knowledge that your rent and bills will still be paid while you consider your next step.  

 The biggest positive of having savings is knowing that you are in control. I’d encourage everyone to set aside an amount for savings and pensions each month, aiming for a minimum of 15%. Get into the habit of this early – as early as your very first pay packet. Think of it as ‘Paying yourself first!’

 If you are to take away only one nugget of advice from me today, let it be this one! 

  • Appreciate the power of compounding 

Most people earn money by working for a living and getting paid a salary. Compound interest, the interest you earn on top of interest, gives you money without having to work for it. No, really!

So, for example, if you invest £100 per month for 30 years at 5% return, it could be worth £84,145. Compare this to investing £100 per month for 30 years at 0% return… This works out at just £36,000, I know which one I’d prefer! 

 Albert Einstein allegedly called this deceptively simple formula the ‘greatest mathematical discovery of all time’.

  • Don’t be afraid to ask 

It’s too easy to come up against a hurdle and, instead of jumping over it, allow it to stop you in your tracks. 

If you are faced with a challenge and need advice, ask for help! Find an expert or mentor that can help guide you towards your goal – generally people like to be helpful, offering their own experiences and guidance. 

  • Find a healthy life balance

Finding a healthy balance in life is so important as you get older, get into good habits now. Get enough sleep, be active, take time for yourself, eat well and don’t drink too much! But do find time to enjoy yourself – live is for living after all. 

  • Build your asset bank

Real wealth is generated by owning an asset that generates an income. If you are musically gifted in any way, how about writing a hit Christmas Song? Hours of airtime every year! Failing that, here are some other ideas:

  • Buy a property – if you decide to move away or travel the world, you have the option to rent or sell 
  • Use your income to invest and benefit from compound interest
  • Start your own business 

There are plenty of opportunities out there, you just need to find what works for you. Just bear in mind, the sooner you start creating wealth, the better!

  • Speak to a Financial Planner

I assure you that I’m not only saying this because I am one, but getting good financial advice from the outset can quite frankly change the course of your life. Speak to a financial planner early and they can set you on the right path, setting you up for lifelong success. 

Chartwell Financial Planners provides independent financial advice to Isle of Man private clients and business’, covering protection, investments, pensions and retirement planning.

If you would like to speak to Jo and the team to find out how they can help you manage your finances and secure your financial future, give them a call on 801409.