Money in Your 20s: What I'd Do Differently If I Started Over

If you could restart your financial life at 22, what would you do differently? In this episode, Ryan answers that honestly, and the takeaways work for anyone who wants to build wealth, not just recent grads.

His list is refreshingly simple: start investing early so time does the heavy lifting, automate your savings so good habits run on autopilot, always capture your full employer match, keep lifestyle creep in check as your income grows, and lean on Roth accounts while your tax rate is low. Aaron adds his own take, and the two keep it practical. This is education, not personal advice, so build your own plan around your situation.

Find "Your Fiscal Physical" the book on Amazon

If you have suggestions or feedback, please email us at: Podcast@AlchemyWealth.com

And, as always, Stay the Course!

Transcript

Welcome And Where To Listen

SPEAKER_00 0:05

Jordan State Week is With Canon with the founder of Alchemy Wealth Management and author of your Festival Festival. Ryan Delta. Tune in to gain valuable insights and practical tops as we simplify complex financial concepts into digestible lessons. From budgeting to retirement planning, this podcast is your go-to resource for mastering financial literacy.

Aaron Hoisington 0:33

Welcome everybody. This week's episode of the Fiscal Physical Podcast. Happy to have you guys with us. Appreciate all the listeners out there. Without you, we uh probably wouldn't be doing this, or at least we wouldn't uh have people listening to it. So uh thank you so much. Uh wouldn't be the uh Fiscal Physical Podcast without my co-host uh Ryan Nelson, founder of Alchemy Wealth Management. Uh Ryan, how are you today? Doing really well. How are you doing? I'm doing solid. I appreciate it, man. Thank you so much. Um thanks all the listeners out there. Wherever you get your podcast, uh set your uh set your clock, set your watch, set your reminders. Uh every Tuesday these episodes drop. Find us on Spotify, Apple Podcasts, YouTube, wherever you get your podcasts, happy to do it. So uh Ryan, you ready for this week? Absolutely. Let's do it. All right, let's dive in.

The Age 22 Money Do Over

Aaron Hoisington 1:18

So uh, you know, I was going back uh and I was thinking about our uh I think it was last week's uh world famous personal section on this podcast. We uh uh I know everybody's out there just waits for that section here. So uh we talked about going back in time and you know going back to one uh you know a date for 24 hours, uh uh what it would be, and we had some good good answers there, I think. And so it really got my brain achurning about this. About, you know, I love a good hypothetical just in the um, you know, just in general, and it it it doesn't get much juicier than this one, I'm gonna tell you. So I think we've all probably thought about this in our lives. So um for this this context, we're gonna go back to uh uh what would you do differently financially if you could go back to age 22? Now the scope of this, I'm gonna kind of outline it here for you. So um you get to go back to when you just graduated college, you have the same income level and growth trajectory career-wise. Um, however, would you, you know, do anything differently? Would you do anything the same with your money? Like, how would you kind of approach that? Um a little bit of a difficult question, I think, because it's really you can make it what you want, but um it kind of goes it. The main thing is I'm thinking about our listeners who are in kind of this range, like you know, you always say, like, oh, back in my day, or oh, I wish I would have done this kind of thing. Like, this kind of like paints the picture of like maybe what you can do right now in the same way. So hopefully it all kind of ties together. But uh uh with that uh that uh mumbo jumbo there, Ryan, I'll turn it over to you, see what see how you want to approach this one.

Ryan Nelson 2:48

Yeah, I mean, yeah, to your point, I think one of the most common things I hear in my profession is somebody coming in and them saying, Man, I wish I would have hired you earlier, or wish I would have started this 10 years ago or 20 years ago, right? Or I wish I would have started this when I was my kid's age. So um, yeah, it's a really sort of common question. Um, I think that you know, the main thing is everybody says they wish they would have started earlier. Right. Um, like that's like almost universally everybody, I think, believes they wish they would have started earlier.

Aaron Hoisington 3:18

Have you ever come across someone who was like, Man, I'm so glad I started right when I did? Like, like I feel like that's very rare.

Ryan Nelson 3:25

I mean, there's people who are good savers. So like I have uh a lot of clients, I'd almost loop myself into this bucket who are more natural savers. And I think that like I did start I was, you know, I was saving in college as an intern in college, right? And like, so there's I think there are people who have a proclivity to saving, and like they did start early and started young and right and have been aggressive uh as far as savings goes their whole life. So I think there are people who probably just naturally for whatever reason have gravitated towards putting a percentage of their assets away from the very beginning. Um, but largely, yeah, I think that that you know, when you take the the median population, it's like, yeah, I wish I would have started earlier. Yeah, I feel like that's a classic, yep, for sure. Um so yeah, that's definitely wish I would have started earlier. Um, so I'd say for most people, you know, getting started right out of college, uh, you know, so we're graduated college, we have the same income. Um, I I really think that in hindsight, most people would look back and say, Man, I wish I would have saved more. Um I think that's that that's the main thing.

Automate Savings And Grab The Match

Ryan Nelson 4:28

Um, and I'd say, you know, as like words of wisdom would be like to automate that, to set up a small amount of automated savings, whether it's weekly, monthly, whatever, um, and just do it consistently, right? Automate it so it's it's out of your control, so to speak. You're not thinking about it, it's not relying on further self-discipline. You just automated the process and you can just let it do its thing. Um, I'd say a lot of people too, they um sort of regret not taking advantage of their employer's match. Oh, yeah. That's good. So if they say, Man, I hadn't participated in my 401k for the last 20 years, you know, and then in hindsight it's like, gosh, if I would have taken advantage of that employer match for those 20 years, I would have been a lot more money I got from my employers, right? So not only my money would have been going into my retirement, but my employer's money would have been going into my retirement. Um, so I think that's a a a big one that a lot of people would have uh appreciated sort of starting earlier right out of college.

Aaron Hoisington 5:21

Yeah, and I think the employer match piece of it, it sometimes it can be like even if it's just a small match. I remember when I met with you, one of the first times you're like, oh yeah, if you get a match, like take advantage of that. Like that's free money that you're getting there. So and even like you mentioned, like over 20 years, 15 years, whoever that that that even that small amount, whether it be a hundred dollars a paycheck, like that adds up over time. And like you really at the time you're like, Oh, I a hundred dollars, who know who needs that? Like, but it's like I'm not even getting that until like 30 years, right? You'll be kind of happy with that later in life.

Ryan Nelson 5:55

Yeah, it adds up, it's surprising. Yeah um and then kind of stretching your prompt a little bit here, but like maybe not right

Percent Based Saving Beats Lifestyle Creep

Ryan Nelson 6:02

when you graduate. But well, I I think something useful is setting a savings rate that's like a percentage of your income. Oh, smart. So let's say you graduate, let's let's say you you you let's say you just say for easy math, you say I'm gonna save 20% of my income. Um, cool. Then maybe you're working making fifty thousand dollars when you graduate, so you're saving ten thousand dollars, right? The problem is a lot of people start saving ten thousand dollars and then they start making sixty grand, but they still are saving ten thousand and then they're making seventy grand, you know, they're eventually making a hundred grand, still saving ten thousand dollars a year. Now, this person did a good job. If they started saving 10 grand a year right out of college, they did a good job. The problem is now they've sort of proportionally started saving less and less without even meaning to, you know, when they were saving $10,000 out of $50,000, that was 20% of their income. Now they're only saving 10% of their income, $10,000 out of $100,000. So that means the other 90,000 is going to their lifestyle. So they've now increased their expenses, which means they've increased how much they need for retirement, but they haven't then increased their retirement savings. So they've made more money in actually taking themselves further away from their retirement goal by increasing their expenses, increasing their retirement needs, keeping their retirement savings the same. So I would say if you just structure your savings as a percentage of your income, or if you think about it that way, it will naturally scale up with you over time. So as you're earning $50,000 and you're saving 20%, that's $10,000. And then as you scale up and you're making $80,000, now you're still saving 20%, so you're saving 16 grand. As you get to $100,000 of income, you're still saving 20%, so now you're saving $20,000. So looking at it as a percentage of income as opposed to a flat dollar amount you're saving allows it to scale as your income grows, and it keeps you from sort of moving further away from your retirement goal as your income increases. Because I see it all the time where somebody gets they they may start making more money, right? As they make more money, it takes them further and further away from their retirement goal. And it's counterintuitive. You wouldn't think that'd be the case, but it happens all the time. I would almost argue, at least in the cases I see, usually making more money takes people further away from their retirement goal because it increases their expenses at a faster rate than it increases their savings. Um that's fascinating. Yeah. So the opposite should be true. If you make more money, it should be easier to retire, right? Uh but the problem is most people don't view their savings as a percentage.

Aaron Hoisington 8:15

They they they like a flat rate normally is like, hey, oh, cool. I'm saving 500 bucks a month. I'm just gonna continue to do that because it's what it is. But like, hey, I'm I'm making you know 20% more. Let me make that $600 a month. It's said kind of piece of it. Oh, that's that is fascinating. I didn't even think about that. Yeah, I should probably look at my finances. Yeah, yeah, yeah, yeah.

Emergency Fund Sweet Spot

Ryan Nelson 8:34

Um so yeah, that'd be I I mean, it that that'd be the number one thing for sure. Um, the other thing that I would say like that people probably regret is not having like a good emergency fund. Um in and that could go both ways. So some people have too much money in their emergencies fund, some people have too little money in their emergency fund. Um, but the reality is I think if people could go back in time, there's some people who only who maybe have too little in their emergency fund, like basically let's call it no emergency emergency fund, and then an event happens and they have to start taking money out of like their old 401k or something, and they're getting penalized, right? They're they're taking it out before they're allowed to, so they're getting penalized and paying taxes. And then in hindsight, you're like, man, that deteriorated my my net worth because I had to pay like these extra penalties. If I would have had an emergency savings, I could have avoided that, right? Sure. And then the flip side is true. You'll also talk with people who, you know, in hindsight, maybe they've kept $250,000 in cash for the last 30 years is basically their their quote unquote emergency savings. It's like, gosh, you know, in hindsight, they say, man, if I would have invested that, you know, if I would have only kept 30 grand in emergency savings and invested the 220 grand, you know, it would have grown into who knows, maybe a million dollars, you know. And so it's like, man, I lot I left a lot on the table by you know not properly managing that emergency savings. Um, so that'd probably be the next biggest thing is kind of that I'd just call it cash management, making sure you have the right amount in your emergency savings. We can see how both having too little or having too much in your emergency savings both can deter from your long-term like retirement success. Um, so yeah, that'd be the the next thing. And then maybe maybe we'll just go touch on uh there's just so many things too.

Aaron Hoisington 10:11

Sure, absolutely. I mean, I think the list is like enormous about like what you could do. It like yeah, it and just like button in here just as far as myself. Like I remember when I first learned, thanks to Ryan, about like a like really learned what like a Roth Roth IRA was, and I was like, oh my gosh, like I started doing the math on like what if I would have started this at 18. Yeah, right. Like even if I didn't max it out, like I just get something in there, and then that taxable or that tax that growth is tax-free with it. I'm like, holy smokes, I could have had 10 more years ahead of this, like kind of piece of it. So uh yeah, I I I wanted to get that one in there because I was like, oh, I wish I would have like actually been a little more serious about that. Like that then, but also I'm like, that's probably better that I started at you know 27 versus like 57, too. That's like right, yeah, for sure.

Ryan Nelson 11:00

Yeah, and it's again one of those things where there's a lot of people who in hindsight would probably say, Man, I wish I started when Aaron did at 27. Right, yeah. You know, and you're saying, Man, I wish I had started at 18, right? So, yeah, to answer your earlier point, it's like, yeah, everybody wishes they would have started like real six. Um, but so if we say, okay, um, like just uh basically starting investing is like the number one thing and automating that investing, right? And then the number two thing would in let's say that that so from an investing standpoint, let's say like starting investing, automating the investing, automated automating the investing as a percentage of income, we'll kind of call all of that just like early investing.

Debt Choices And Values Based Spending

Ryan Nelson 11:37

Number two, we can call the emergency fund or cash management. And then number three, I would say would revolve around debt. Um and I think too often people in hindsight, they you know, so maybe they if we're keeping using this example, they graduate um college, they get a job, they go buy a new car, or they buy a house and they go too far into debt and they don't maybe fully understand the implications of that debt, right? And maybe instead of buying the car, if they would have just saved up for five years and bought the car outright or something, right? Um, so yeah, i I think just like the misuse of debt can be sort of devastating for a lot of people um and create bad like long-term habits. Um yeah, I'd say like investing early and often, um uh proper cash management and then let's say proper debt management.

Aaron Hoisington 12:25

Yeah, no, that's that's that's great. And I think one of the things you you you I saw that you were gonna touch on too, or could potentially touch all of those are like habits, I would say, that you kind of build. And I feel like you know, everybody I can't remember what the saying is about how long it takes to build a habit or like how long it takes to break it or whatever, but like if if you start at that younger age, like and you're just like, oh, this is just part of what it is. Is it setting up a percentage that goes in? Cool, I know however much I make, I'm putting you know 7% into my savings or whatever the number might be. Like, yeah, or I'm like, hey, you know, you know, it's starting from a young age, it's like maybe I don't buy the $20,000 car and I buy the $10,000 car because I can buy that outright and I can keep that cash flow kind of going. So um just thinking about those things and building those habits from a young age, and that's you know for myself, I have like a two and a half year old at home, and it's all about like habits and routines. Right. Like if you can start that and be like, cool, we take a bath and then we go to bed, like we we brush our teeth, we do these things, and you just kind of build those, and I think about the habits that I've built over my life, like good or bad, like those are things that I I started from a young age, and so if you think about it like just starting to think about it financially, I think is is is also huge. I mean, if you could start thinking financially, building good habits there, versus when you're like, holy smokes, I'm now making more money, maybe I should do something with it. I feel like it could really uh really really help overall, and all of those things you mentioned, I was like, oh yeah, just building good habits with these areas that maybe you don't max out the four or the Roth, but you get something into it. And I think that's that's that's super important and kind of what you've been been talking about there. If you if you don't go into debt early, maybe you don't have as big of an opportunity to go into it later because you're like, no, I I I like not having owing you know hundreds of thousands of dollars on something.

Ryan Nelson 14:13

It's kind of funny too, like just kind of thinking about that. Like when if you graduate high college, let's say again, and you go buy like that BMW, um, the you like you're you're doing it gets you around just fine as the Honda Civic, right? But you're buying the BMW so you like look cool in front of your friend, right? Um and and what's interesting though is it's like you know the people who bought the BMWs are then you know at age, you know, it let's call it at age 60, are looking at the people who bought the Honda Civics and saying, Man, you're already retiring, like how do you know you had that much money? Like you know, like and then they're like jealous of them for being able to retire at 60 and they're gonna have to work till they're 70, right? Or you know, whatever, change the numbers as you see fit. But uh, you know, I love the kind of the saying, like you can either look rich or be rich, but you can't do both. And it and it's yeah, it's kind of funny. It's like, yeah, you know, in in hindsight, which I guess is exactly your question, your original question here is like in hindsight, I think a lot of people maybe have made decisions to look rich, and it actually detracted from them actually being rich. And in hindsight, going back and saying, Man, I wish I would have bought the Honda Civic instead of the BMW, and I'd have more money in my retirement, be able to retire earlier, have more financial independence, be able to travel more, right? Um, like I think, yeah, in hindsight, probably a lot of people would go back and maybe not make those ego purchases and make the more practical purchase, which is easier said than done. And in hindsight, it's easy to do. But then even today, like in you know, it's it's always easier said than done. All this stuff.

Aaron Hoisington 15:40

It's funny you mentioned that I was talking to my wife the other day and uh we were driving through a neighborhood and she's like, Oh yeah, like I had some friends who used to live here, and she's like, Wow, and she was like thinking about those, like uh that family friends. There were like a family of like four, like two kids and uh adults, and sh in her mind she was like, This family always like looked very poor. Like they the the fur they just passed their clothes down, they always got hammy downs, they'd like never had anything flashy, they always had like really old cars, like these different things. She's like, but then every summer they would go like on an eight-week vacation extravaganza through like different places and like through Europe and all these different places, and she's like, and I found she's she's like, I found out later that they were just like very, very wealthy, but you would have no idea, like looking at them, like she's like, they they did not look like and she's like, but they just use their money, they were like, nah, we don't we don't find this important, like to get from point A to point B isn't that important to us, or what we wear really isn't that important, but what we do or how we like and both of the parents were retired at 45, and it was just like holy smokes, like that's awesome. They have done done well, and you get to kind of enjoy those different things, so it's it's all about like beauty is in the eye beholder, people say, and like but the perspective on like oh, like maybe that's not the worst idea to think about.

Ryan Nelson 16:59

Yeah, so it sounds like they probably had a good I good idea of what they valued, and then a good idea of aligning their expenses with their values, which is awesome for them.

Aaron Hoisington 17:07

Exactly. Like what you like. I know that uh when we you I met with you, you're like, cool, like what do you want? What's your what are your goals? Yeah, like that's the big piece of it of like, hey, like in in figuring out is that goal like you know, living, you know, with $2,000 a month, or is that living $6,000 a month? Is it $10,000 a month? Do you want to travel? Do you want to buy a trailer? Do you want to play golf every day? Like whatever that is, like and figuring that out from a young age to kind of tie this back, that worked out well, um, is uh you know, is is immeasurable, I feel like, if you can at least uh financially be like, this is what I want to do. I want to work till I'm 50, and then I want to just not work. Yeah, kind of there if that's your goal, how do we get you there? And I think that that's something that if with the right financial planning, I think you can hopefully make that happen. Oh, definitely.

Ryan Nelson 17:52

So absolutely um awesome.

Aaron Hoisington 17:53

Well, appreciate you appreciate you, Ryan. There's kind of an open-ended question that I asked you here, but I think you did excellent with it, and hopefully the listeners got something out of it and um also kind of challenges them to think about like, man, what would you do at 22? And like, as people have kids or have friends who have kids, you can kind of like pass on that wisdom, like there's that man yells at cloud kind of thing. It's like, hey, like put something in an IRA area. But um awesome. Let's go ahead and uh take a pause here and uh we'll be back on the

Worst Travel Discomfort Stories

Aaron Hoisington 18:20

uh other side of this. Everyone, hang tight.

SPEAKER_00 18:22

And now to put the personal in personal finance.

Aaron Hoisington 18:28

Welcome back, everybody. This uh the physical physical podcast. Uh still here with Ryan and uh we're getting into the personal section here. Uh uh last week's personal section sparked the whole conversation for this uh this episode. So um that was I think one of the first times that's happened, so that's fun. But uh we'll see what this one brings. Uh you ready, Ryan? Let's do it. All right, so this is a fun, this is gonna be a fun one here. Um, what is the most uncomfortable travel experience you have ever had? Um, so you've you've traveled a decent amount, Ryan. So I'm curious if it if anything like stands out of like what was you're like, oh my god, like that was horrific kind of piece of it, if you have anything in your mind.

Ryan Nelson 19:07

Yeah, I mean Peru is pretty bad at it, but uh you were there for that, but I'll bypass that one. And uh uh coming back home from uh Brazil, um, we had a kind I don't even remember, I think it was like one of those like 20 plus hour travel days. And one of the flights, you know, I think it's like a 10 plus hour flight or something. I don't even remember. This is just how it's like sticks out in my head. Um, although I do think that is true, but it's at least somewhere in that neighborhood. And uh I got like really sick at the end of the Brazil trip. Um, I think it was like some water or something. Right, right. Uh I don't know how I would have got any water, but yeah, yeah. I was pretty I was pretty careful. Uh but uh so it but anyway, so I ended up getting really sick and um yeah, just had it having to fly home on this like 10-hour flight. And I was just usually I get hot in planes. Man, I was just so cold in this thing. I just just like had like one of those little they little plane blankets, and I was just like sitting in this chair, just like miserable for like 10 hours, basically not able to move, just freezing, like had the chills, just super sick. Um, so yeah, that was um yeah, that was an uncomfortable moment. What about you?

Aaron Hoisington 20:17

No, that's a that's a that that would do it for sure. It's actually funny. Uh my uncomfortable well, a couple of my uncomfortable experiences also involve you, just in general. Like uh uh there was the one when we went to Columbia, we got sick, had to go to the hospital, but we won't bore everybody with that. But uh the other one that I was thinking uh is back in I want to say 2018, 2017, something like that. We went to uh Morro Bay, California. Oh yeah, oh yeah, and uh um we had a great weekend, it was awesome. Um the car ride home? Yes, and so like for those who aren't aware, like there's uh in Moro Bay, it's kind of in I guess like South Central California. I don't know how you want to do it. Somewhere in there, it's like I'd almost call it even south. I don't know. Yeah, it's like a six, seven, eight-hour drive, something like that. I can't remember how long, but um it's like Cal Poly area. Yeah, yeah, exactly. So we drove down, no issues on the way down, awesome. But on the way back, like that morning, I woke up and I wasn't I wasn't feeling super great. And I I tend to get a little car sick sometimes, but we were we were driving back and I was like, man, I just don't feel good. I had a donut that morning. I remember it just didn't sit well. Also had some beef jerky, so maybe I'm thinking that uh that might have done something with it. Um you had bought all sorts of kind of animal jerky. Yeah, you had bought all sorts of animal jerky down there, and uh alligators. Probably had some gator jerky that didn't really sit well. Anyway, wasn't feeling super good. So we're on the road, and there ended up being like a um big accident or a road closure, and we had to detour away from the original way and take this other way that was just super windy through this like area. And I was just in the back seat and I was just felt like I was spinning, and I ended up uh asking uh uh your wife now. She was driving to pull over, and I ended up uh you know vomiting and And that whole rest of that trip was just I just felt like I was constantly on the verge of like vomiting. And I was sweating and it was just like it was off. I couldn't I was either too hot, too cold, and I swear that trip home took like twenty-four hours. I was in there just like I'd never been so happy to like get back home. And uh that was that was an awful car ride. I remember getting back and being like, oh my gosh, like I I and it was in your parents' van, is what we took to that thing. So anyway, that was not my favorite experience, just in general. Yeah, being sick traveling is never fun. It is, I'm sure a lot of people's uh experiences kind of revolve around that, I suppose. But uh um anyway, we'll see you uh see what the listeners have to say. Let us know what your uh most uncomfortable travel experience was, uh if you've ever had one. Hopefully you've had just wonderful trips and no issues whatsoever. We we wish that for everybody, but uh let us know. And uh um thanks everyone for listening. Really appreciate it. You know, thanks for checking us out, whatever get your podcast. And uh, Ryan, I will let you have the uh last word on this episode. As always, stay the course.

SPEAKER_00 23:04

Thank you for joining us for the Fiscal Physical Podcast. Until next time, happy listening.

Listener Prompts And Closing Disclaimers

SPEAKER_00 23:10

And as always, stay the course. If you have a question or topic suggestions, please email us at podcast at alchemywealth.com. If you enjoyed today's discussion, subscribe to the podcast to ensure you never miss an episode and consider leaving us a rating and review on your favorite platform. This helps other listeners like you find the show. For more resources, you can visit Alchemy Wealth Management's website at www.alchemywealth.com or find your fiscal physical, the book on Amazon. We'd be remiss if we didn't mention that personal finance is just that. Personal. Please don't take anything we say as advice. The preceding content is for informational and entertainment purposes only. It's not an offer or a solicitation, nor should it be construed or relied upon for tax, legal, or investment advice. It doesn't consider your personal financial situation or objectives and may not be suitable for you.