Saving your money is something that you are either good at or you're bad at. Some people like spending that hard-earned cash, while some like to prepare for the future and save that dough.
ONE37pm interviewed three successful males in their early 30s about their investing philosophies, goals, advice for younger folks and what they learned from dumb financial decisions.
Home state: Virginia
Yearly Income: $180k
Monthly Rent/Mortage: $850 monthly rent
What is your savings rate?
Roughly 75 percent.
Are you saving for anything in particular?
Early retirement.
What is your general saving/investing strategy?
Mostly Vanguard index funds and work-sponsored retirement accounts. A minimal amount in cryptocurrency.
How did the 2008 financial crash shape your financial worldview, if at all?
This was before I entered the workforce and it had no impact on me. I was hardly even aware of it at the time.
What was your dumbest financial decision? What did you learn from it?
I went through an extra fellowship during my training which took two years to complete. In retrospect, the opportunity cost of those two years, especially with the market performance at that time, was substantial.
What was your smartest financial decision?
Medical school. The work is secure and well compensated. I graduated with a manageable amount of debt and have essentially guaranteed a six-figure income for as long as I want to work.
What general advice would you give to others about personal finance?
Start earlier rather than later. Don't underestimate the power of compound interest; it can be your greatest ally or your greatest foe.
Home state: Indiana
Yearly Income: $140k
Monthly Rent/Mortgage: $1760 monthly mortgage payment
How would you describe your financial journey in a few sentences?
Slow and steady growth. Only recently have I been able to set aside significant money for savings and my 401k. However, I’ve been contributing as much as I could since I started.
What is your savings rate?
I’m able to save around 10k per year. Mostly through company bonuses. No real scientific determination. I try to save what I can yet live the life I want at the same time. It’s a balance of enjoying life but preparing for the future in the meantime.
Are you saving for anything in particular?
Currently, I'm focused on retirement—the ability to retire early if desired. General financial freedom. I’m not shooting for extreme wealth, but the ability to do what I want when I want (within reason). I also want to take care of my kids’ educational costs so they can have a fresh start like I did.
What is your general saving/investing strategy?
I'm able to save mostly through company bonuses. We are one-income as my wife stays home to raise the family so, for now, we are semi-maxed out—yet well balanced and disciplined. She will eventually go back to work (5-7 years) and I am hoping to move up within my company in the meantime—upon which I will really ramp up the savings and investments.
How did the 2008 financial crash shape your financial worldview, if at all?
Don’t overextend yourself. Have a backup plan...and don’t go into credit card debt. I’ve had access to over 20k in credit card funds and have never carried a balance in over 10 years. Ensure that you can afford your finances with a single income if something ever happened to your spouse. It’s a simple concept but not one that people practice. Don’t try and keep up with the Joneses. What you have compared to others doesn’t mean a damn thing if you are happy and healthy and can provide for your family.
What was your dumbest financial decision? What did you learn from it?
When I first started working I wasn’t making much money. I bought a Corvette because my friend had one (he had a lot more money than I did). I also had a new truck and was basically working to pay for both of those loans. I lived off of roughly $100 a month for anything extra I did. I still made it work and didn’t go into debt—but I had no business having 2 cars just because I “could.” I also took out a small investment account I had and paid a penalty to do so, just so that I could put a down payment on the Corvette.
What was your smartest financial decision?
Contributing to a 401k as early as I was able to—and contributing at least the maximum company match. It seemed like it took a while to notice growth—and although I’m probably not in the top savings tier I’m definitely above average. I have 30 years to work and am now contributing 6 percent on a $100k+ salary. The dividends are nice, and I’m really starting to see it grow. I will continue to add 1 percent or more each year until maxed out.
What general advice would you give to others about personal finance?
You don’t have to be a financial guru to start making a difference in your life. It’s scary to me how many people don’t have backup funds or anything saved for retirement. I haven’t done anything special but I’ve been consistent and now that I’m a little older and have access to more money, I will continue to look for safe investment opportunities to grow money outside of my 401k. Live within your means—it’s so easy to overextend yourself especially in this social media world where everyone makes their lives look glamorous. Lastly, pay your bills on time and work on building a high credit score. 750+. You will have access to much cheaper loan rates due to the fact banks will consider you a low-risk lender. This will save you a considerable amount of money over time.
Home state: New Jersey
Monthly Rent/Mortgage: $1700 monthly rent
How would you describe your financial journey in a few sentences?
My financial journey has typically been about finding the right balance between spending on necessities such as rent/utilities/food and saving, with the occasional splurge on tech toys. It goes without saying that this balance changes with time and with changing priorities.
What is your savings rate?
I aim to keep my savings rate between 20 and 30 percent. This rate is determined by keeping in mind both long-term (e.g., retirement) and short-term (e.g., vacation) goals.
Are you saving for anything in particular?
Vacation and an automobile in the short term.
Do you invest your savings? If so, what is your general investing strategy?
Diversify! I invest in equity, commodities and fixed income.
How did the 2008 financial crash shape your financial worldview, if at all?
It was pivotal especially with regards to short-term investment strategy. Lessons learned were to diversify and cut losses with early exits.
What was your dumbest financial decision? What did you learn from it?
Most of my bad decisions were driven by haste and no thorough research.
What was your smartest financial decision?
Using expert help. For example, instead of investing directly in equity markets, you can invest in mutual funds which are managed by professional fund managers with years of industry experience.
What general advice would you give to others about personal finance?
Do not save what is left after spending, spend what is left after saving!
