I'm on track to retire wealthy, but there are still 4 money lessons I wish I'd learned before 40 (2024)

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• My husband and I are on track to retire wealthy, but we weren't always smart with our money.
• I wish we'd started investing sooner, and learned earlier that we could make more working for ourselves.
• I've also learned that it's possible to make some bad decisions and still do fine.

When my husband and I started getting serious about our finances in our late 20s, we naturally thought we had everything figured out. We believed we would live intensely frugal lives and work toward paying off every cent of debt we had, and that's exactly what we did. However, we never thought much about what happens next, or how our attitudes about money might dramatically change as we age.

The reality is, we became self-employed somewhere along the way and started earning more money. And, now that I'm 43, I can say with certainty that we're financially independent and on track to retire wealthy when our kids leave the house in seven years.

That said, there are some lessons I learned in my 30s and early 40s that I wish had clicked earlier, and for more reasons than one. Here's an overview of what I wish I'd known about money when I was younger, and why.

1. Earning more money changes everything

The first lesson I wish I had learned earlier is just how impactful it can be to increase your earnings, especially since I only earned around $40,000 at my old 9-5 job.

No matter what anyone says to the contrary, there's only so much you can save when you're on a fixed income. You can cut your cable bill and start using a monthly meal plan. From there, other steps like buying a smaller home and shopping around for car insurance and homeowners insurance can only save so much.

Even worse, working in a traditional 9-5 job also means getting whatever raise you're assigned to receive each year, if you get one at all. At my old job from more than a decade ago, I was pretty much limited to a 3% raise each year no matter what.

On the flip side, finding a way to earn more money can solve myriad problems while helping you invest for the future on a much faster timeline. If I could go back and change anything in this realm, I would have left my traditional job to become self-employed as early as possible instead of spending years wondering if I would be making the right move.

For those who aren't interested in self-employment, finding other ways to earn more can be a huge deal. This could mean taking on overtime at work, picking up a side hustle, or switching jobs to secure higher pay.

2. The power of compound interest is astonishing

This lesson ties into the first one, but I really do wish we had begun investing for retirement at a much younger age. We actually opened 401(k) plans for the first time in our late 20s, and we only contributed a nominal percentage of our incomes at the time. Now that I know and understand the magic of compound interest, I wish we had contributed much more than we did.

The fact is, investing as regularly and early as possible is the best way to benefit from compound interest so you can retire when you want, and on your own terms. After all, investing early lets you begin building up a nest egg that increases in value over time, and compound interest eventually lets you grow wealth off of wealth you already earned on your investments in the past.

Just as an example, consider this financial scenario:

Imagine you invest $1,500 a month for 30 years starting at age 30, which means you are making $540,000 in contributions over that time. If you earned an average yield of 7%, you would end the 30-year period at age 60 with just over $1.7 million.

Now imagine you invest $2,250 for 20 years starting at age 40, which means you are making the same $540,000 in investments over a shorter timeline. With the same 7% yield, you would end the 20 years at age 60 with just over $1.106 million instead.

3. You can make a lot of bad decisions and still do fine

While my husband and I have made some really good financial decisions, we have made some pretty tragic ones, too. For example, we delayed investing for retirement as I already mentioned, and we overspent on remodeling our second home and sold it for a loss.

We also spent a ton of money trading in our cars for new ones during the first few years of our marriage, and we initially had our investments with a high-cost brokerage firm that charged pricey and unnecessary fees. (Business Insider tracks the best online brokerages, if you're looking).

As I've gotten older, however, I have realized you can make a lot of big mistakes and still do pretty well. You just have to have some good decisions mixed into the bad, and you have to focus on "getting ahead" slowly over time, even if you feel like you're taking three steps forward and two steps back each year.

Ultimately, my husband and I made lots of great decisions, including venturing into self-employment, investing a ton during our highest earning years, and avoiding debt for more than a decade and counting. While the mistakes from our past have held us back to a certain extent, the good decisions we have made more than made up for the difference.

4. Mental energy is expensive

In the last few years especially, I have learned that my mental energy must be preserved for the things in life that actually matter. This often means I am more than willing to pay for conveniences that help me stay sane, whether that means having my house cleaned on a regular basis or ordering groceries online so I can skip the store.

This lesson took me a long time to learn, especially since I used to be so frugal. There were years in my life where I would spend hours trying to save a few bucks, whether through cutting coupons or driving from store to store to shop sales.

Now that I'm older, I would rather spend my free time working or relaxing with my kids. It took a decade, but I now know for sure that my time is better spent investing in my family or my work. Anything else that can be outsourced is, and I rarely worry about the cost.

Ultimately, growing old is teaching me that money matters a lot, but not for the reasons I once thought. These days, I use money to buy freedom and time — the two things in life that are truly priceless.

This article was originally published in November 2022.