Good morning, happy Monday, & happy April Fool’s Day! I hope you had a wonderful Easter!
“We are in the business of making mistakes. The only difference between the winners and the loser is that the winners make small mistakes, while the losers make big mistakes.”
– Ned Davis, financial analysist
A few weeks ago I asked you, my amazing client base, to answer a question: If you could go back and tell a 20-something year old version of yourself anything about money / finances, what would you tell yourself?
Thank you for taking the time to respond, you had some great wisdom to share. I really enjoyed reading your responses. 😊
Many of you shared mistakes you had made and learned from as a young adult. Here is a sample of some of the advice you would have given a younger version of yourself (summarized for brevity purposes):
- Live humbly and within your means, get an IRA and start saving right away
- Budget your money and save 10%
- Save consistently and aggressively
- Put great intention towards saving
- Be patient, invest, and save, and find another Jonathan Hunt
- Credit cards are for emergencies only, don’t buy it if you can’t afford it
- Invest every penny you can and don’t touch it
- Save 10% of all income (paychecks, bonuses, etc.) and forget about it
- Pray to be a godly steward of money, it’s all ultimately God’s anyways
- Make wise decisions with money even if it’s hard
- You can have everything in life if you just help enough people get what they want
- Prioritize, set aside an emergency fund, realize unexpected situations will arise (they do for everyone), seek wise godly counsel
- Be committed to IRA contributions, be a student of investments, practice delayed gratification
- Save a little from each paycheck … pennies do really add up
- Invest, don’t wait, even if you can only contribute a little
- Open a Roth and max fund it, get full 401k employer match – don’t think about the sacrifice, end result will be more than worth it
- Find something you are passionate about and enjoy doing, learn to be content
- Start saving for retirement now!
These are indeed great words of wisdom. Thank you again for sharing, this was a fun project! 😊
A reoccurring theme from these comments was something along the lines of “save / invest early and don’t stop, even when it’s hard.”
Not a single one of you said, “Charge it and figure it out later,” or, “Have a great time now and don’t worry about the future.” We all understand that would be terrible advice to give to a young person.
And yet, that is the message society pretty much tries to tell us on a daily basis. Virtually every TV commercial, interstate billboard, internet ad, and social media banner sends a subtle (sometimes not so subtle) message of “buy now, pay later.” Did you see any commercials during the Super Bowl promoting wise financial management?
If you want to be happy purchase this better car, take this big vacation, make these purchases you can’t afford … the monthly payments are only X per month!
The joy these purchases wears off, but you know what doesn’t? The payments! You are stuck with those for a long time!
I can buy a $50,000 car and only pay $779 per month (7-year financing term @ 8%). The problem is 5 years from now that car is no longer new and provides me with very little joy, but I still have 2 more years of payments. Plus, when that long 7 years is finally over I’ve paid $64,436 in total payments ($779 monthly x 7 years of payments) for a $50,000 car … $14,436 in interest in this example!
I’m not necessarily saying don’t finance a car, but I am saying the joy wears off long before the payments do! Just be aware that this is how the game is played.
Understanding how we work, what brings us joy and what brings us stress, is a critical component of financial success.
At the car lot I am likely going to convince myself that the joy of the car is worth the monthly payments. Will I still feel that way a few years down the road?
As a kid I use to have a rule when shopping … I would determine what I would be willing to pay for an item before I looked at the price. I pre-determined what I was willing to pay for that pack of baseball cards and then would look at the price. If the price was at that level or below then I would make the purchase, if it was above my pre-set price point that I would put it back. I was clear on what I was willing to pay so I would avoid the temptation to try to convince myself to pay whatever price they were asking.
Yes, I was good with money even as a kid. There are all sorts of funny stories about how I would lend my siblings money at 8 years old with a written contract and an interest rate. 😉 I knew I wanted to be a financial advisor since I was probably 10 or 11 years old.
As I wrap up here, I will requote Pastor Greg Groeschel from a Monday morning memo a couple of weeks ago: “When your values are clear, your decisions are easy.”
My advice to a young person is: “Get clear on your values and your goals and then allow those values/goals drive your purchasing / saving / investment decisions and tune out all the rest, it’s just noise that distracts.”
It is an honor to be on your team! Please never hesitate to reach out with any ways we can support you.
Make it a great week ahead!