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Four Principles About Clothes and Money I Wish I'd Known In My Twenties

I felt like I learned a lot of impractical things at school. Even though I had a career in finance, I never did need to understand quadratic equations. Meanwhile, the things that are so important to daily life, such as how to construct a good wardrobe, control expenses, invest in a retirement plan and adjust your behavior for greater success, are not typically taught at school.

I wish I'd known these principles before I launched into living on my own; they would have saved me a lot of anxiety and money.

1. I wish I'd known how to build a quality core wardrobe with separates.

All items except white jeans purchased used

In my 20s, as in my teens, I focused on purchasing expensive one-of-a-kind outfits (usually dresses) rather than on learning how to identify and select quality separates to build what's now known as a "capsule wardrobe." 

2. I wish I'd known about the 50-20-30 budget.

It wasn't until I went through a financial crisis in my mid-thirties that I learned a concept that is so basic it should be taught in high school. I certainly understood the concept of a budget, but I didn't understand how all the pieces should fit together--how I shouldn't spend more than 28% of my before-tax income on rent, for example, or how a car shouldn't cost more than 50% of my annual salary  While there are all kinds of these individual ratios you can look up online, there is a very simple way to apply them, as explained in a helpful personal finance book called All Your Worth: The Ultimate Lifetime Money Plan by Warren and Tyagi (available at your local library):
  • 50% of your take-home pay (that is, after taxes and deductions) gets allocated to needs, such as rent/mortgage, food, basic clothing and transportation.
  • 20% of your pay gets allocated to savings, both short-term and long-term. For example, 10% might go to your 401k for long-term savings, and another 10% would go to pay down debt and then build an emergency fund.
  • 30% of your take-home pay gets allocated to fun, including travel, more "fun" clothing, nightlife.
Nerdwallet provides more detail and a calculator at this site if you'd like to explore this a little more.

3. I wish I'd understood the compounding power of small habits.

Money isn't the only thing that compounds over time, although taking advantage of that compounding is crucial to getting ahead financially (you can learn to invest in the stock market without having to study individual stocks - read Ramit Sethi's book, I Will Teach You To Be Rich, available at your local library). 

The best results in my life, by far, have come from developing small habits that have yielded huge results over time, such as tracking every expense, making a habit of purchasing my clothing used, or only reading books from the library. If you want to read a great book about the benefits of habit formation, try Charles Duhigg's The Power of Habit, available at your local library.

4. I wish I'd practiced "Deep Work" more frequently.

Deep Work is a concept (and book) defined and popularized by author, Cal Newport, which refers to the "ability to focus without distraction on a cognitively demanding task." This approach to work allows you to develop rare expertise while still having time for fun and relationships. I could have gotten a lot more accomplished in my life, and at a much younger age, if I'd put this concept into practice regularly.

I still struggle with all four of these principles, particularly the last two. I can tell you from personal experience, making progress on any of these is worth the effort!

 



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