Hey guys.
It's Chelsea from The Financial Diet with new, once again,
shorter hair.
And this week's video is brought to you by Wealthsimple.
And today I wanted to talk about something
that I thought would be pretty fun but also very informative,
which is the life choices that I'm glad I didn't make.
Obviously, moving through young adulthood
is a series of forks in the road.
And as I talked about in a recent video,
there's always something called "opportunity cost," which
can be expressed otherwise as what you gave up
by taking a certain choice.
It's so easy to feel overwhelmed by all the options in front
of you and to not be sure when you're
making the right decision, especially
when it comes to big things like marriage, family, career, et
cetera.
So I thought I'd maybe help you a little bit in your journey
by looking back at some of the big life decisions
that I'm glad I avoided.
Number one was having a credit card before I could handle it.
Now, as you all obviously know by this point
because I've said it a million times, when I was 18
I got a credit card, maxed it out, threw it away,
and destroyed my credit.
But what I haven't talked about quite as often
is the fact that I went almost five years after that time
without a credit card at all.
And I did that not really because I
couldn't access a credit card.
I chose not to have a credit card during that time
because I knew I was still someone who wasn't very
responsible, wasn't very good with doing things on time,
and tended to do the minimum.
And when it comes to credit cards specifically,
being the kind of person who does
the minimum can get you into a ton of trouble.
Paying the minimum balance on credit cards,
especially higher-interest credit cards,
means that you're spending years potentially paying
just the interest and never the actual amount of money
you charge.
And beyond just paying the minimum
and staying in debt, if you don't make those payments
at all, even one or two missed payments
can really impact your credit score.
So while we talk a lot on TFD about how credit cards can
be really helpful to use to your advantage,
that only applies to people who have mastered the habits
and routines that it takes to use them responsibly.
So if you're someone who's looking to build up
those habits and to not overspend
just because you're using a card,
one thing that I highly recommend,
which is something that I did myself,
was to start with a prepaid credit card or a rehab credit
card.
Now, a rehab credit card, like the one I used,
often just means they have super low limits on them.
Like I had a $300 one to start, which means that, even
in the worst case, it's hard to get yourself
into that much trouble.
And prepaid credit cards are even
further in terms of helping you not harm yourself because it's
literally what it sounds like.
It acts like a debit card in that
you prepay the amount on it.
But your bank treats it like a credit card.
So you get good credit for having
made those payments regularly.
Either way, not jumping into a financial engagement
that you can't trust yourself to really handle well
is super important.
You have to treat these big financial decisions,
such as using a credit card, like the big life choice
it is because it can potentially get you into a ton of trouble.
Number two was paying to live on my own
when I couldn't afford it.
Now, my path after high school was fairly typical in the sense
that I went out and lived in a house
with a few roommates for about a year and a half.
But once I decided that my next life move was to live abroad--
and I knew that that required a lot of saving up
money and a lot of logistical planning, which
means free time and therefore less work--
I chose to move back in with my parents for almost a year.
Now, of course, looking back today at all the money
it saved me doing that and how much
it allowed me to smoothly transition
into such a big life choice, it seems like the obvious move.
But at the time, it felt terrible.
Like a lot of people who've ever had
to move back with their parents or stay
living at home, on some level it felt like a failure.
Because A, I felt like I was not doing the adult, cool thing.
And B, I felt like I was losing a fair amount of freedom.
But there are a couple things that are important to remember.
First of all, if you are going back to live with your parents
or still living with them in the first place,
that is very, very common, especially
for the millennial generation.
A recent Pew study revealed that for young adults age 18 to 34,
they are actually living at home with their parents
at the highest rate since 1940.
And it's not just about how common it is.
It's also about how much money it really saves you.
Because when you're just thinking
in terms of month-to-month costs, you can think, oh, well,
it's just a couple hundred dollars on rent.
How much does that really mean?
Just to take my city, New York City, as an example,
the average cost of a one-bedroom is $3,680 a month,
which means if you didn't pay rent here,
you'd be saving nearly $45,000 a year, or a full year's salary.
And even if you are paying some rent at your parents' house,
it would probably be well below market.
Plus you would be sharing a lot of meals, utilities,
and other day-to-day costs with them.
And even in much cheaper cities, the average number
that you would save by not renting for a year
is between $10,000 and $20,000, which for most people
is a life-changing amount of money.
That money could be the difference
between paying down tons of student debt
or saving up to buy a home or being
able to change careers or move across the country
or any other number of things that you want
to be able to do that require you
to have a big amount of cash at one time.
But no matter what decision you make,
it's so important to be making these decisions based
on what is right for you and what you want and not
what looks coolest or your friends
think you should be doing or what
you feel some outward pressure to accomplish.
When we feel that pull to make a life choice,
it's so important that we stop and really ask ourselves,
where is this pull coming from?
Is it coming from outside of me?
Or is it coming from within me?
And if I was honest with myself at the time,
when I was moving back in with my parents, that shame
and guilt and doubt I felt was about everyone else
and how they would see me, not about me,
because I actually thought it was a great decision.
And it was.
I am forever grateful that I moved back home with my parents
during that time because it allowed
me to make life-changing and awesome life decisions
that I wouldn't have otherwise been able to do.
Number three is staying in a career I didn't love
because it felt prestigious.
When I was in college, I majored in international relations.
And I was doing a lot of political and diplomatic
internships because that's sort of the path I initially chose.
And I didn't even really know why.
It felt prestigious.
And because I was both in the DC area
and spoke a second language, diplomacy
slash international politics felt like such an obvious path.
But I never really enjoyed it that much.
And I remember always feeling really
disappointed with the real-world implications of that work
that I was idealizing in my head.
And it wasn't just about not liking
the actual day-to-day work.
It was also this constant pressure
to live up to an image of myself that really wasn't me.
Basically from the time I graduated high school,
that was the path that I told everyone I was on.
And that was the path I followed.
So the idea of changing paths felt like a failure.
And it felt like giving up this identity that
had started to give me a lot of personal meaning.
But I obviously ended up changing that path,
cutting my losses, getting over the embarrassment
of having to say, well, that didn't work out.
And I realized at the end of it that I actually
did learn a ton from that, even if I didn't end up
working in that field.
The skills that I learned from working
in the political and diplomatic environments
were hugely beneficial when I started my own business or even
just in acting a certain way in a regular office job.
So just because you're changing something
and it may feel like a bit of a disappointment in the moment
does not mean that that was worthless.
Number four was going to a real college when I wanted to.
Now, I've mentioned before on this channel
that I went to a community college after high school.
And it was something that I felt a lot
of shame and embarrassment around when it happened.
I actually really liked my classes.
I had a ton of freedom at community college.
I was able to found a club.
I was able to do tons of extracurricular activities.
And I actually loved everyone I went to school with.
I learned so much.
And having that transition took me
from being a really terrible high school student to someone
who built up their grades and was
able to get into those prestigious programs
that I mentioned.
But outside, it just felt like I was not
living up to this image of myself that I had in my head.
But it turned out that community college
allowed me to get an education with nearly zero debt
and go on to have the financial and educational freedom to go
live abroad and go to school there,
which I had always wanted to do.
If I had been saddled with six figures of student debt,
I never could have made that choice.
And while I didn't get to have that sort
of classic American college experience
that I idealized in my head, I had an experience
that gave me the flexibility that I needed, taught me
how to learn better, and most importantly taught me
that education is about what you're getting out of it,
not what it looks like.
Number five is driving a car after my accidents.
Between the ages of like 17 and 21, I drove.
And I got into an enormous amount of accidents.
Once I got into a final really scary accident,
I decided, you know what?
Driving and owning a car is just not for me.
And it's one of the best life decisions
I've ever made, both from a personal standpoint
and also from a financial one.
Obviously, now that I live in a big city,
public transportation is way more accessible.
But I can attest to the fact that even in smaller areas,
you can definitely make it work, especially when combined
with a bike.
If you're thinking of giving up your car,
here are just a couple quick things to consider.
The average vehicle costs over $8,000 a year
to own and operate.
And that includes the vehicle itself, gas,
and other maintenance.
And on top of that, new vehicles lose
an average of $15,000 in value during just the first five
years.
For a lot of you, driving might seem like the only life choice.
But I assure you that it isn't.
And I'm so glad it's one I didn't make.
Number six is staying friends with people who made
me feel badly about myself.
Social media especially can make us feel like people
stay in our lives forever.
They can keep you up to date on people you barely know or speak
to anymore.
And it can make you feel like you're
living your life in front of these people
that you don't even seek out to see.
And it can also make you hold on to friendships way
past their expiration date.
The truth is that not every friendship
is meant to last forever.
And it's so important to frequently take
stock of the people in your life and decide where you're
getting the most value and focus your attention and your time
there.
It's OK to phase out from certain friendships
or even occasionally have a tough conversation where things
sort of have to cool off.
Not making the choice to keep people around just because
of that sunk cost fallacy that you've already been friends
with so long but rather choosing my friends actively
based on who's adding to my life has
been such an important and defining part of my 20s.
Number seven is forgoing financial safety
to follow my dreams.
There was a time when I was working as an au pair
while writing articles on the side for a little bit of money.
And for about six months during that time,
I seriously considered quitting my au pair job,
even though I couldn't really afford to, and just figure it
out because I was so desperate and impatient to feel
like a full-time creative professional
that I wanted to be.
It was, once again, one of those moments where
everyone's outward perception of me
was really driving me toward a choice that
wasn't smart for me.
I had a sense of shame around the fact that babysitting,
essentially, was providing a substantial portion
of my income.
And I had a desire to live a life of a person I
had envisioned in my head rather than
live the life with the cards that I was dealt.
And we actually did a really awesome interview on TFD
a while back with a woman who was a best-selling author
and a nanny at the same time.
She talks a lot about how working other jobs to keep
that financial stability while you pursue
your creative or passion jobs isn't just awesome and safe
from a financial perspective.
It also gives you a ton of inspiration and motivation
for your day-to-day creative pursuits.
Not to mention it's so much easier
to think creatively and expansively
when you're not paranoid and freaked out about not
being able to pay your rent.
Ultimately, I'm so glad that I kept nannying
and even took on a third nonwriting job--
tutoring people-- to make that transition smooth
and one that I could feel good about every step of the way.
I think it made me a better writer.
But more importantly, it made me a better adult.
And the last life choice that I'm glad I didn't make
was getting married before I was ready.
Now, as some of you might know, I just got married to Mark
very recently, who is this wonderful guy
that I've been dating for very nearly seven years now.
Obviously, we waited a long time just
in our personal relationship to get married.
But I also got married at 29, which for some people
is a little on the later side.
And I distinctly remember much, much, much earlier in my 20s
being with someone and thinking that I could possibly get
married to them at that time.
Like I'm sure a lot of you can relate to
with your long high school relationships
or your long college relationships,
it can feel like this person is it.
That's all there is out there for you.
It's the only time you'll ever experience love.
And if anything happens to that relationship, you'll die.
But like most of us have also learned
when that college or high school or young adult relationship
ends, your life goes on.
And you do fall in love again.
And often what happens is when we fall in love again,
we do so as a more mature, fully formed, and thoughtful adult
who is not only able to find someone who's
a smarter choice for them but can also
enter into that relationship on a more independent and equal
footing.
And there's a lot of evidence out there
that, especially for women, waiting a little bit
to get married can have huge beneficial impacts
on your financial life.
For example, the average annual personal income
for college-educated women in their mid 30s
who married after age 30 is $50,415
compared with $32,263 for college-educated women
of the same age who married before age
20, a 56% difference.
And female high school graduates who attended some college also
enjoy higher wages if they wait to marry,
though the gap is not as wide.
Those who marry after 30 earn $22,286 a year
by their mid 30s, while those who marry before 20
earn $18,234, a 22% difference.
But it's not just about money.
It's also making sure that you are the person that you want
to be as an individual before you commit yourself
to life with someone else.
You want to make sure you are a fully developed, thoughtful,
and capable person who is able to take care of yourself
and to make these decisions with a clear mind.
And that means, for example, creating a list of things
that you want to do before you get married, which is
especially important for women.
Because as we've mentioned before on this channel,
over 50% of women do not manage their long-term financial
planning until the case of divorce or death
of a spouse, which means that often they were just not
raised to look at themselves as the person in charge
of that sort of thing.
Or they didn't have the kind of education
they needed to make those long-term decisions.
So it's impossible to overemphasize how important it
is for women to go into these commitments
with a strong, strong level of independence.
Because even if everything goes perfectly in your marriage,
something could happen to that person.
For me, my personal individual bucket list
for before I was married was to travel, was to live alone,
and was to start a career on my own
that was super meaningful to me.
Being able to accomplish those things as an individual woman
and also waiting till a time in my life when it made much more
financial, logistical, and personal
sense to get married means that I
am going into this marriage with such a level of confidence.
I know that if anything were to happen to Mark,
I would be OK and know how to take care of myself.
And I also know that I went into this decision
as a fully formed person making a fully informed decision.
Marriage is one of the biggest life choices that many of us
will make.
So having the right mentality and sense of self
is of the utmost importance going in.
Ultimately, we're all going to make different life choices.
And what was right for me might be wrong for you
and vice versa.
This channel isn't about how to learn how to do everything
just the way I did it.
It's about how to go about these life
choices and these financial moves
with a real sense of why you're doing it,
who you're doing it for, and what you're getting out of it.
I'm so glad I didn't make these choices, because they allowed
me to make these other life choices that have turned out
to be so wonderful.
And I encourage you to go back and look
at the life choices you made and didn't make and see
where you're really, really happy with what you did.
And one life choice that I'm extremely excited that I did
make was starting to invest.
And if you're looking to start to invest yourself,
even with just $1, an awesome, awesome way to get started
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Check them out at wealthsimple.com/TFD.
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And remember, you can get started with literally $1.
No excuses.
So as always, guys, thank you so much for watching.
And don't forget to hit the Subscribe button
and to come back every Tuesday and Thursday
for new and awesome videos.
Bye.