3 Personal Finance Lessons I Wish I Learned in My 20s

If you're in your 20s and just beginning to find your footing, you may (mistakenly) believe that you should "have it all together" by now. Nope. Your best bet at this point is to be patient with yourself and, if you can, learn from the mistakes of others -- because most of us made some doozies.

Here's what I wish I'd known in my 20s.

1. If we're fortunate, we'll eventually grow old

While we're busy building careers, finding mates, raising children, and dreaming of what we want to do next, the future sneaks up on us. One day we're sitting in class, and the next, we're planning for retirement.

I was all about living for the moment in my 20s, too impatient to wait for anything I wanted. And so, instead of investing money for my golden years, I found endless ways to spend it. When I was 25, I told myself that I'd settle down at 30 and focus on how to invest. When I was 30, I told myself that waiting until age 35 still gave me plenty of time.

Here's how investing before you think you absolutely must makes a difference:

Let’s say you’re 23 years old and earning $40,000 annually ($3,333 per month). You work for a company that matches 3% of its employee's 401(k) contributions, so you contribute 3%.

Even if you never earn more than $40,000 and never invest more than 3%, here’s how much you would have saved by the time you reach age 67:

• Your monthly contribution is $100 ($3,333 x 0.03 = $100)
• Your employer’s monthly contribution is $100 (matching your 3%)
• If your 401(k) earns an average return of 7%, your total monthly contribution of $200 will be worth just shy of $638,900 at age 67.

Pro tip: It's okay to start slow, particularly as you build an emergency savings account. You're moving in the right direction as long as you contribute something. Chances are, once you see your money grow, you'll look for ways to contribute more.

2. No one is looking

I have wasted a ridiculous number of hours worrying about what other people think of me. What I didn't realize in my 20s is that no one thought anything at all. Studies show humans suffer from the "spotlight effect," the belief that people are paying far more attention to us than they actually are. We are so acutely aware of what we're doing and how we look (or fear we look) that we assume other people are equally interested. The truth is other people are busy being acutely aware of their own stuff.

All this to say, I wish I hadn't tried so hard to impress others when I was young. Rather than buying a new car before I needed one, I would have paid off my credit cards. Instead of taking an Instagram-worthy vacation, I would have purchased fractional shares of stock.

Note: Needing to impress the people around you doesn't actually qualify as a "need." Being able to pay your monthly bills, get out of debt, boost your credit score, and plan for the future are needs.

3. Living below your means leads to freedom

I am so much more than how much I earn or what I own. I haven't always known that. And because I got caught up believing that I needed to be more and have more, I lost sight of what was valuable. As trite as it may sound, it's the people in my life and the experiences we've shared that matter.

My husband and I knew that we would have to live below our means if we wanted to double down on our investments so he could eventually retire (I never want to retire, but that's another story). I don't mean to imply that it was easy. We spent several years paying off debt and positioning ourselves to spend less than we earn.

What came as the biggest surprise was the way living below our means refocused my attention on what I value. Once I wasn't tied up in knots and worried about how everything would get paid, I had more time to walk the dogs, work out, read good books, and visit people I adore.

If I'd known all of this in my 20s, I like to think I would have put the brakes on my attempts to impress others by gobbling up possessions like the human version of The Very Hungry Caterpillar. Because like the caterpillar, the only thing over-consumption ever did for me was make me feel a little sick.

If you're young and figuring it out (and let's face it; we're all figuring it out), you'll have stories of your own and lessons you pass on to the next generation. Ideally, those lessons will save someone time, energy, and money.