You’re Never Too Young to Use Money Wisely

Sports Car

A few weeks back, Jill and I had some close friends over for supper, Ted and Molly. Like most everyone else we know, our social life has taken a backseat to Covid-19 precautions, so we really enjoyed the good food, a few adult beverages, and even greater conversation. At one point the conversation came around to their adult son, Michael, who is in his late 20’s. His folks are worried that he was about to make some financial missteps that will have some long-term repercussions.  Ted and Molly are financially successful, conservative, and in their mid-fifties or so. They feared their son was about to make a financial mistake:  choosing to spend a large sum of his savings on a new high-end sports car rather than keep saving towards the down payment on a first home.

They were hoping that Michael would listen to financial advice from me.  They asked me to reach out and to meet with him, and luckily he agreed. I wasn’t really sure what to expect. His parents are nice, thoughtful people, so I shouldn’t have been surprised that he was a bright and mature young man.

Prior to meeting with him, I went through a mental checklist of some things I might be sharing with my own kids a few years from now when they will face a similar choice. When we did meet, I was surprised that, for someone early in his career, he was doing many things quite well. The kid had virtually no debt.  Unlike some people in their twenties who think of saving and investing as a future endeavor, he was already checking off many of the items on my list. He had moved home at the start of the pandemic and was living within his means. He had a healthy savings account for someone his age.  In addition, he already consistently met the matching rate in his company’s 401K match and had amassed almost $50,000 in his plan already.  Even better, he had already opened a Roth IRA and made the maximum contribution the last two years.  

When I commended him on how well he had positioned himself financially for someone his age, he talked about how he usually sought his parent’s advice and tried to model their financial behavior.  The challenging part of the conversation came when we discussed his near-term financial goals. When he finished college, he set his primary financial goal to save enough for a substantial down payment on a place of his own. Now that he finally had some “real” money of his own, he was feeling the urge to defer that goal and instead enjoy some of the fruits of his labor.  In this case, it was a new sports car, like one of his old fraternity brothers had recently purchased.

I listened as he excitedly described the car he had in mind and could almost envision myself tooling down the highway with him. Not only was it a state-of-the-art vehicle, but he had done his homework and pointed out that it held its resale value as well as anything on the road.  He admitted that he expected me to confirm his parent’s opinion and tell him it was a terrible idea to buy the car. I told him I didn’t think me telling him yes or no on the car was of any real value.  What value I could provide came in terms decision making advice and anticipating consequences, good or bad, of any action he took.

For example, would he be okay two or three years from now pulling his used sports car into the driveway of another college buddy’s new home – something he could no longer afford due to paying for the car?  Sure, he might be okay with that, but he also might regret the day he picked the depreciating value of his car over a home.  I suggested that buying the sports car in itself might not be a mistake, but soon he may find the right person to share his life and start a family. The trade-off between a car and a home could look starkly different in just a few years.

 I told him he had done well to avoid many of the financial mistakes some people make in their 20’s.  Unlike many people his age, he has saved and invested, he has financial goals, and he lives within his means. I acknowledged that none of us can completely avoid mistakes, I’ve certainly made a few myself.  But I explained to him that the key is avoiding those bigger mistakes that drive us too far-off course.  Being able to have discipline to hold off on buying things at the wrong time can go a long way towards future happiness and financial success.     

As Michael was leaving my office, I repeated to him that I could not say for sure buying the sports car was the wrong move for him personally. He needed to carefully consider the potential outcome of changing his original goal of saving for a home. And this doesn’t mean he had to give up his sports car dream forever. Perhaps ten years from now when he’s married with a couple of kids, he can pull into the driveway of his very own home with latest sports car and his wife can tell him it was a mistake for sure.  I know Jill would!

So as always – be vigilant and stay alert, because you deserve more!

Have a great week.

Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, & Mansfield. Jeff can be reached at

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