I'm so proud of my younger brother. He just started his own blog, exhibiting far more entrepreneurial spirit and career-mindedness than I ever showed at his age.
Unfortunately, most young people his age are woefully unprepared for their personal financial futures. I know it took Donnie and me years to get in decent shape, and we're still working hard at it today. Looking back, there are quite a few mistakes I wish we hadn't made. The good news is that we certainly learned from the error of our ways. Now we're better equipped to manage our financial situation, and help our (future!) children make smart money decisions.
Here are some of the lessons I've learned on my personal financial journey. What about you?
Don't buy anything unless you can pay cash. When I first started using credit cards, I had no idea how much money I would end up losing to finance charges and late fees. I viewed the cards a kind of payment plan, and didn't realize they were nothing more than a debt trap. If I could "do it all over again," I wouldn't sign up for even a single card. Now, if I want something I can't afford, I save until I can pay for it out of pocket. The peace of mind is worth the wait.
You can't have everything you want. I know this sounds obvious, but for a long time I bought "stuff" without thinking about it too much. If Donnie and I felt like going out to dinner, picking out some new clothes, or getting some new DVDs, we just did. It took me a long time to realize that I was trading my long-term financial security in for some very empty, short-term "happiness." Now I try hard to be content with what I have. I don't shop for recreation, and when I identify a true need, I do research to get the highest quality at the best price.
College isn't always worth the price. I spent four years at an expensive private school. As a result, I'll probably be paying student loans back for the next ten years at least--and I work in an industry that doesn't even require a degree. I do consider my BA a valuable asset, since it will allow me to move up in my company and pursue a wide variety of opportunities. However, if I could "do it all over again," I would probably attend a community college for two years, then finish my bachelor's degree at an inexpensive state school. I'd still have a BA, without the mountain of debt.
You can't always count on a salary. Once upon a time, I assumed that Donnie's and my paychecks would be our sole source of income. Now I know better. We've been fortunate to experience stability and growth in our careers, but over the past few years we've seen family and friends take pay cuts or lose their employment entirely. That's why we pursue alternate sources of income whenever we can. We certainly won't be quitting our day jobs anytime soon, but we know that, with hard work and dedication, we could weather a layoff or pay cut.
Pay yourself first. I know this is the oldest piece of financial advice there is, yet I somehow managed to avoid living by it for many years. I have to admit, when I think of the thousands of dollars I could have saved, I feel more than a twinge of guilt. Unfortunately, there's nothing I can do about it now, except change the error of my ways. I now contribute to my 401(k), and put a portion of every paycheck in a savings account. When Donnie and I earn extra or unexpected income, instead of spending it, we save it. The peace of mind is worth far more than anything we could buy.
What lessons have you learned on your financial journey?
Unfortunately, most young people his age are woefully unprepared for their personal financial futures. I know it took Donnie and me years to get in decent shape, and we're still working hard at it today. Looking back, there are quite a few mistakes I wish we hadn't made. The good news is that we certainly learned from the error of our ways. Now we're better equipped to manage our financial situation, and help our (future!) children make smart money decisions.
Here are some of the lessons I've learned on my personal financial journey. What about you?
Don't buy anything unless you can pay cash. When I first started using credit cards, I had no idea how much money I would end up losing to finance charges and late fees. I viewed the cards a kind of payment plan, and didn't realize they were nothing more than a debt trap. If I could "do it all over again," I wouldn't sign up for even a single card. Now, if I want something I can't afford, I save until I can pay for it out of pocket. The peace of mind is worth the wait.
You can't have everything you want. I know this sounds obvious, but for a long time I bought "stuff" without thinking about it too much. If Donnie and I felt like going out to dinner, picking out some new clothes, or getting some new DVDs, we just did. It took me a long time to realize that I was trading my long-term financial security in for some very empty, short-term "happiness." Now I try hard to be content with what I have. I don't shop for recreation, and when I identify a true need, I do research to get the highest quality at the best price.
College isn't always worth the price. I spent four years at an expensive private school. As a result, I'll probably be paying student loans back for the next ten years at least--and I work in an industry that doesn't even require a degree. I do consider my BA a valuable asset, since it will allow me to move up in my company and pursue a wide variety of opportunities. However, if I could "do it all over again," I would probably attend a community college for two years, then finish my bachelor's degree at an inexpensive state school. I'd still have a BA, without the mountain of debt.
You can't always count on a salary. Once upon a time, I assumed that Donnie's and my paychecks would be our sole source of income. Now I know better. We've been fortunate to experience stability and growth in our careers, but over the past few years we've seen family and friends take pay cuts or lose their employment entirely. That's why we pursue alternate sources of income whenever we can. We certainly won't be quitting our day jobs anytime soon, but we know that, with hard work and dedication, we could weather a layoff or pay cut.
Pay yourself first. I know this is the oldest piece of financial advice there is, yet I somehow managed to avoid living by it for many years. I have to admit, when I think of the thousands of dollars I could have saved, I feel more than a twinge of guilt. Unfortunately, there's nothing I can do about it now, except change the error of my ways. I now contribute to my 401(k), and put a portion of every paycheck in a savings account. When Donnie and I earn extra or unexpected income, instead of spending it, we save it. The peace of mind is worth far more than anything we could buy.
What lessons have you learned on your financial journey?
1 comments:
These are great reflections and I agree with most of these.
Personally, I think it's OK to use a credit card to get points or cash back, but as long as you're disciplined and pay it off every month. Also, you do need credit cards to build up your credit rating to be able to get car and home loans. I'd recommend getting one like American Express that you have to pay off each month.
Regarding college, I did the same thing as you, but in my mind it was worth the money since I went to a top 10 university and it opened lots of doors for me in my career; opportunities I am certain I never would have had access to had I gone somewhere else. I think private schools are worth the money if you will get ROI in your career and salary. My husband, on the other hand, did half his college education at a good community college, then transferred to UCLA. But it took him 10 years to finish college. As a result his student loan debt is a lot less, though and he still has a great degree.
Some other lessons...
I think living below our means is smart. We are buying a house that is 20% below what we got approved for, so that we don't get in over our heads, and so that we have something left at the end of the month. If something does happen to cash flow, we are prepared and won't lose our home.
Money can't buy happiness. I was most miserable when I made a great salary and had tons of disposable income. I worked so hard for that that there was no time left at the end of the day to enjoy life. Time to enjoy life and family is priceless.
Sorry for the long comment!
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