Advice for the 25-Year-Old Me

Sharing a libation with my best bro on my 25th b-day.

Sharing a libation with my best bro on my 25th b-day.

Kate, a young entrepreneur that I’m mentoring, recently sent me this e-mail:

I’m turning 25 in two days, and I’ve asked a bunch of people from my life what they wish they had known at 25. I’d love to hear your thoughts on what you’d tell your 25 year old self!

This is what I said:

Here’s the most practical advice I can share with you: Save 50% of your income.

It’s a huge target, but I think that it’s something everyone should strive for. Read this article about early retirement, then read my article about F-You Money.

Here’s TL;DR: the more you save (and subsequently invest), the faster you’ll get to financial independence. And the quicker you get to financial independence, the faster you earn the freedom to do anything you want.

Think about it: if you had all the money you needed to cover your expenses indefinitely, you (1) no longer have to work for money, and (2) can take massive risks and never have to fear failure.

I didn’t truly appreciate the idea of financial independence until I was about 30. Missing those five years of aggressive savings between 25 (where you are now) and 30 has turned out to be quite costly.

This is the best advice I could possibly give to any young adult. Good luck.

What would you tell your 25-year-old self?

18 thoughts on “Advice for the 25-Year-Old Me

  1. Robby Ratan

    I would recommend the opposite. Spend 100% and plan not to live forever. JK. But seriously, I would not give up that memory of locking arms and raising bottles with you for anything. …though I wish I could remember it better.

    Reply
    1. Eric Post author

      I’m referring to opportunity cost. I spent money on useless crap in my 20s that didn’t provide any real marginal joy in my life. Knowing what I know now, I should have put that disposable income into a Vanguard Index Fund, which would allow that money to compound into a substantial sum of money when I’m older.

      Reply
      1. themoviefiend

        Oh, I mean, I understand the general concept and see that it would apply to most people (including myself), but do you really feel you would have achieved financial independence earlier if you’d been more frugal? I thought your liquidity was gained more from your startup success, which I assume would have taken the same amount of time?

      2. Eric Post author

        That’s a really excellent point. I don’t know. Yes, the acquisition brought me into financial independence, but that was also a nine-year journey. I may have been able to get to the same point over that decade at a larger company (particularly a good tech firm like Google) that pays well, coupled with a strong savings rate. This path vs. startup might have been a lot less heartache along the way.

  2. themoviefiend

    Oh, that’s so interesting! Do you have posts that talk more about the heartache of the startup? As someone who did kind of do the big corporation thing and lived a pretty frugal life, I can attest to the fact that you can achieve financial independence in about 10-15 years, but our standard of living is probably a lot lower than what you’ve achieved through your hard work/stress/acquisition. Do you think you would say that if you could go back you would have gone the other route?

    Reply
    1. Eric Post author

      I’ve written a bit about startup life, you can see past articles here: https://lifeafterliquidity.com/category/entrepreneurship/

      I’m interested in hearing more about your comment that ‘our standard of living is probably a lot lower than what you’ve achieved through your hard work/stress/acquisition’. I would say that quality of life is far worse at a startup. The salary is pitiful, benefits non-existent, and work hours are brutal.

      That said, would I have changed anything? Absolutely not. Startup stress is overwhelming, and there were many days where I wanted to hide under my sheets all day instead of face the challenge. However, there is also a sense of pure existential joy and peace in running your own company. You are learning more and doing more than you could ever have imagined–and every day you feel like you are living to your full potential. It’s an incredible feeling. That experience was worth more than the financial reward at the end.

      Reply
      1. themoviefiend

        Ah, sorry, I meant that when we achieve financial independence, I think our standard of living will be lower than what you achieved when you finally gained financial independence. In other words, I’m comparing our end points rather than our journeys. I agree that the cushy corporate life would be a lot more comfortable than running your own startup.

        So, sorry, back to my original question–was the opportunity cost you were referring to that if you had saved and your startup hadn’t been successful, you would have been in a bad situation, but luckily your startup was successful so you didn’t actually have to pay for your spendthrift ways?

      2. Eric Post author

        Yeah, I think that’s mostly right. Had I understood a bit of personal finance and why a high-savings target is important, then I think I would (1) have even more liquidity today and in the decades to come, and (2) have felt less stressed closer to when I got acquired. Toward the end of my startup, my finances were dwindling down pretty rapidly. I felt more pressure to get to a sale. Had I had more savings in the bank, I think I could have negotiated from a position of security–or at least more security–for my deal too.

  3. msrrautela

    Hey Eric..Great post. Have watched your interview with Eric(the other one) and it was great too..You really talk about things that is on top of minds of young people. I’m trying to build an online community in an emerging area where no online community exists so far. The ideal way to build a forum is a) start a blog b) get enough traction c) start a forum. But since this is an emerging area as I said and there might be other forums popping up in another 1-2 years, I want the forum to be the first one in this space. I’ve installed the forum and will be dividing my writings between blogs and forum posts so that there are posts in the forum but not sure whether this strategy is optimal. What do you think are some of the things I should keep in mind as I go forward? Would really appreciate if you could take the time to share your expertise in starting and scaling a forum in blog post if the comment section is small.

    Reply
  4. Julio Sanchez

    Hi Eric,

    I found this post and many of the comments very insightful! I’m glad I stumbled on your blog through instagram. I know I’m super late to this post but I was wondering if you have any advice about investing your money in index funds through vanguard. I recently graduated and will begin working in June. I have been looking alot into personal finance and saving for retirement.

    Reply
    1. Eric Post author

      I’m a huge fan of Vanguard Index Funds, I think they are the best diversified investment vehicle that exists. If you want to get a sense of how some great portfolios are put together, I’m a huge fan of reddit.com/r/financialindependence. Look at the right-hand column, great info for you there. Best of luck! You’re off to a great start thinking about this stuff now.

      Reply

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