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10 Pieces of Money Advice I Would Give to My 21 Year Old Self

by | Oct 31, 2022 | Money, Personal Finance

Most people don’t know Hitler had one testicle.

That’s one reason why he was such an angry bastard. Perhaps that’s even why he went on to commit some of the worst crimes in history.

When we’re in a Hitler-like state of anger we make terrible financial decisions. I wish I had known this as a 21 year old.

Perhaps I wouldn’t have ruined the greatest business opportunity I ever had 5 years later if I’d learned to keep money decisions and anger separate.

Hindsight is an ugly thing.

Here are nine more pieces of money advice I’d give my 21 year old self.

1. “Isn’t it funny how everyone thinks get rich quick stories are always a scam, but get poor quick stories should be taken as gospel”

My business partner said this to me.

When you share optimism about any kind of investment or money-making idea, it’s easy to look like a get-rich-quick salesman.

People can quickly dismiss you.

Yet they read CNN clickbait headlines of “America will collapse” and the “coming financial crisis that will lead to nuclear war” and don’t bat an eyelid. This is gospel because the news says it is.

These are the real stories that will help you get poor quick.

Common ways to make extra money look like a scam. That’s because 90% of people try them and then give up after 3 days. It’s not the opportunity but the mindset and lack of patience that keeps people poor.

To get wealthy: Lower skepticism. Increase effort + patience.

2. The ways the rich avoid tax are mind-blowing

You’ve probably heard about fine art.

Perhaps your saw a banana painted red that sold for $10M and thought to yourself “what idiot would buy that … haha.”

At 21 I thought that too. Then I got a job in banking.

Here’s what I learned:

  • Rich dude earns $10M from his super-successful tech startup
  • Rich dude hires an out-of-work artist to buy a banana and paint it red. Artist gets $10K for the work and thinks they’re a genius.
  • Rich dude gets a friend who’s an art appraiser to value the red banana artwork at $10M.
  • With valuation in hand, rich dude donates artwork to a random museum and gets a $10M tax write-off that financial year.
  • Rich dude pays $0 in tax for the same year he earned $10M from his uber cool San Fran startup.
  • Museum onlookers say “this red banana is so stupid. Can’t believe some dumb rich dude paid for this.”
  • Art critique calls red banana artwork haters stupid and tells them they lack taste for fine art.

This story plays out every day. It happens with charities all the time too. Financially educated people legally minimize tax. I’m not saying you should pull off one of these elaborate rich dude scams.

But you should definitely make sure the way you invest is tax efficient.

3. These finance books would have made me at least $2M more in income

Warren Buffett is one of the most successful investors in the world.

His business partner Charlie Munger thinks he’s a lazy bastard and spends most of his day reading. People who are good with money have read a lot of personal finance books. After a while the patterns of being smart with money are obvious.

Here are the money books I wish I had read at 21 years old:

  1. The Psychology of Money — Morgan Housel
  2. Rich Dad Poor Dad — Robert Kiyosaki
  3. I Will Teach You To Be Rich — Ramit Sethi
  4. The Intelligent Investor — Benjamin Graham
  5. Think and Grow Rich — Napoleon Hill
  6. The Millionaire Next Door — Thomas J. Stanley
  7. One Up On Wall Street — Peter Lynch
  8. The Simple Path to Wealth — J.L. Collins
  9. The Automatic Millionaire — David Bach

What you read has a huge effect on your financial future.

4. The greatest financial mystery most of society doesn’t understand

Image via ArtOfPurpose tweet

Inflation is a fancy word for “devaluing the currency your paycheck is denominated in.”

Inflation is a form of tax. The US government, for example, can either raise taxes to earn money or print/create more money out of thin air and make the cash people already have worth less.

I wish I had known this at 21.

I would never have put money into a savings account. Because the interest on your savings account is before tax and inflation. After those magical forces do their dirty work you get the leftover scraps.

5. A definition of wealth I rarely see spoken about

So you pile around the water cooler at work to talk about your weekend.

Inevitably a colleague always likes to share a story about some mega-wealthy person they met during the break.

They’ll name some fancy possession this person owns, or talk about an experience that almost seems unbelievable. Those around you will be impressed. Trying to one-up the story typically happens next.

We’ve all seen this play out.

At 36, the ultimate form of wealth to me isn’t some dumb boat or a lap dance at Hooters without my wife finding out. It’s connecting with someone without needing anything in return.

My new motto is “I have nothing to sell you.”

I can jump on a Zoom call with a stranger and just talk sh*t without needing favors or getting paid for it.

When you’re not driven solely by money the way you interact in the world changes. You go from transactional to relational.

And one of the greatest forms of wealth you can experience is to have strong relationships with the people around you. They give you so much meaning.

More than a Yolo Elon yacht ever will.

6. All empires eventually collapse

This isn’t doom and gloom. If you read history you’ll see it’s fact.

At 21 I thought the US could do no wrong. Now after a few decades I don’t believe that anymore. The US is the dominant empire thanks to more than 80% of trade being done in US dollars.

Ray Dalio taught me in his book “The Changing World Order” that every empire eventually collapses. A country abusing its currency is one of the common reasons for failure.

A world currency called BRICS is being considered for trade. BRICS stands for Brazil, Russia, India, Ch!na, and South Africa.

Saudi Arabia might join the party too.

This move could take years to play out, but if it does, it would have a serious impact on the usefulness of the US dollar.

While I don’t think the US economy and currency will collapse any time soon, I’m careful not to be on the wrong side of history.

Lesson: Don’t have all your net worth in US dollars or dollar-denominated assets like the Nasdaq.

7. Here’s why low-IQ people appear to have dumb luck and get rich

My IQ is fairly average.

Yet I’ve done well financially over the years. Some critics think I’ve had dumb luck. At 21 I saw many financially successful people and thought the same thing.

The truth is average — or even dumb people — can make a lot of money because they’re not smart enough to doubt themselves. They’re not even smart enough to overthink or get stuck in decision fatigue either.

Less doubt, more action.

8. The things you own … own you

A few years ago Elon Musk famously sold all of his physical possessions.

Elon felt his possessions weighed him down and diluted his focus of sending humans to space. This is because the purchase price of a physical possession is only one part of the cost.

A luxury car, for example, requires maintenance, insurance, gas, etc. Then there’s the hidden cost…

On the day I bought a fancy BMW, I parked it at the shopping mall. I went inside for less than 15 minutes. When I came back out the car was scratched with a key the whole way around.

I was devastated.

From that day on I couldn’t stop thinking about where I parked my car in case it happened again. Possessions carry the mental load of potential loss or damage.

It’s not worth it.

9. The bizarre answer to whether money buys happiness

The cliche goes “money doesn’t buy happiness.”

But being broke and having to think about money all the time doesn’t make us happy either. What money does is buy back your time. Free time equals true freedom.

When you have free time you can use it to figure out what makes you happy and experiment with a few ideas. When you’re broke you’re stuck on the hamster wheel unable to pursue true meaning in life.

Money becomes a distraction instead of a powerful tool.

I wish I had known this final lesson when I was 21.

This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.

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