Automate what you can
Xyz from Our Financial Path came out of the gate swinging with a great first tip:
Automate the most you can! If you automate your savings to come out of your paycheck, you will never see that money and, therefore, just spend what’s left.
You might remember him when he guest posted here about "How are we Saving Half of our Income?". I would definitely agree with him about the automation. Not automating everything right now, I can see how it can free me up from the 10 minutes every 2 weeks that I spend paying bills from my bank account. Having look up the balances for each bill and then paying them right after the pay period they sync up with on our paycheck cycles can take a little bit of time each month.
I guess the biggest reason I haven't done it yet is because I like to look into the bills each month to see how they vary. Being in control when those extra paycheck months roll around, I love squeezing every extra bit out of them that I can! This can be a great way to make sure all your bills are paid on time and you stay on track.
Impress the Importance of Learning to Budget, Save, and Invest
FixingMyFinances brought out the importance of learning the basics:
I would tell them it is important to learn about budgeting, saving, investing, etc because of their emotional health. Sometimes I think we forget about how emotionally taxing bad financial health is. When I got to my lowest point with debt I felt like there was no way to fix it was heart breaking and I never want to feel like that again. If I would have been more focused on budgeting and saving, I would have not gotten to that point and would have never felt that way.
Oftentimes when we are so caught up doing our finances, we forget what it was like before we acquired these skills. I remember the feeling of more money going out than coming in and the anxiety that it brought on. It would hinder my actions because it started to take up more of my day. Great tip!
Related Post: Things I Wish I'd Known About Personal Finance When I Graduated High School
Acquire Income Producing Assets
Forum user ScaredyCatGuide reminds us about building assets that grow:
I will simply tell the younger me; you need to own things. Acquire income producing assets. Whether it’s rental real estate, equity in a business, dividend paying equities and so on and so forth.
You must own income producing assets or revenue streams in order to build real wealth.
Boy I wish I’d of started doing it 10 years earlier!
I agree 100% with this! If we can train ourselves to buy stuff that grows for us, we can reap the incredible power of compound interest! Starting with our small earnings while we're young, the habit will grow as we get older and can really turn into a fortune! Besides that, it's so important to put off lifestyle creep as much as possible to give our money a chance to really grow for us! Important purchases to us in our younger years usually turns into regret when we get older as we haven't learned as much about opportunity cost yet.
Pay Yourself First as Early as Possible
Ms99to1percent chimed in about super saving:
I would say start paying yourself first as early as possible. And I’m not talking about the 10% that’s usually recommended. I’m talking about 50-100% especially when your parents are still supporting you.
Learning to become a super saver can teach you amazing things. I think the whole "save 10%" is too mainstream. People should aim higher by keeping lifestyle creep in check. In the long run, those otehr things don't really mean as much as they fade over time.
Learn About Investing
Forum user KiwiandKeweenaw chimed in about the importance of investing:
Take some time and learn about investing. In reality I use a super simple investment strategy (Simple Path to Wealth), but it was so intimidating taking that first step.
I haven't read that book, but learning about investing is so important in this day and age. The playing field has been completely leveled and it's easier to jump in and get going than ever before! The earlier people can start investing, the more benefits they will reap as time goes on.
Think Free Cash Flow, Not Income
After finding this thread, I jumped in with my response:
My advice would be to think free cash flow, not income! The more margin you have, the more options you have to make better decisions and take advantage of opportunities!
The sooner we can build up cash flow, the sooner we can give ourselves more options to choose from. Most younger people are focused on the income side and how high they can get that yearly salary up to. Sometimes, even spending up to that salary limit as they strive to go higher. I think the more margin you create, the more room to invest, save and give you allow yourself.
What do you think?
What personal finance advice you'd give yourself if you were just starting out again? I'd love to hear it in the comments!
Steven Goodwin
Latest posts by Steven Goodwin (see all)
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Gotta love the Rockstar Forum, right!? Great tips. I wrote a post to my 22-year old daughter titled “The First 6 Steps to Financial Wealth”, sharing them below:
1) Realize the value of time (compounding)
2) Build an emergency fund.
3) Don’t buy something until you have the cash saved.
4) Know where your money is going.
5) Max out your employer match.
6) Track your progress.
I may have to head over to the Rockstar thread and leave a comment there! Looking forward to meeting you in Dallas!!
These are great Fritz! I think you hit the nail on the head man! Only a couple weeks away for Dallas! Yay!
Great advice here!! Adding one… Similar to Fritz #4, track your spending. Every penny. At least for 3 months (a whole year if you can stomach it). See where your money is going so you can see any holes in your spending. You also see what you spend on that is important to you, the things you don’t want to sacrifice. This way you can make room for them in your budget. 🙂
Yeah, I agree MM! Tracking your spending is CRUCIAL! FixingMyFinances sort of hit on budgeting, but tracking is essential! A budget is one thing, how you actually spend your money for some people can be completely different! Thanks for stopping by and I will meet up again with you in Dallas!
Thanks for including us, these are all great tips!
I apologize, this comment went to my spam folder. I appreciate your input! I loved all the tips shared and thought it was too good not to write about!
Hey Steve!
Great article! I like how you rounded up everyone’s comments to my question over at the RockstarFinance forum. I particularly liked your additional comment to the Income Producing Assets @ScaredyCatGuide. Opportunity costs are killer and I know I didn’t think about things like that when I was younger. I’m sure learning now though. Thanks again for this link! Cheers!
Hey Sean! Thanks for posing the question! Glad to see you getting active so quickly after joining! I thought I could personalize it more on my site then on the forum since I like to comment more thoroughly there! Glad you found the roundup helpful! Hopefully it’ll spur more discussion over there as well!
Do exactly what you are going to do, younger self. You rocked it and now I’m early retired and financially independent and have the same one great wife and great grown kids. You did OK, way better than anybody, including you, expected and you someday will look back on life as a guy who loved his career, loves his early retirement and loves his family. Oh, and when they go public sell everything you own and buy Google, Walmart and Apple stock.
Haha, this is great! Hindsight is 20/20, huh?!? Thanks for stopping by!
It came out great, thanks for including my input. And I agree with you that cash is King. We have used our $100K emergency fund to take advantage of a few opportunities that have greatly paid off.
Thanks for the great feedback! Wow, $100k emergency fund, how long did that take to build? It’s amazing the opportunity we can take advantage of when we build margin into our life!
Great post! I love the PF community. It is tough to remember how overwhelming everything was starting out, and amazing to realize how much I’ve learned from reading all these blogs!
There definitely can be a lot to take in at first! Add and blend is what I say! I still learn every day! Yes, the PF community is an amazing community that really does aim to teach and encourage one another!
Automate, pay yourself first and investing… yes to all of these! I would also learn about lifestyle inflation in order to avoid it from the get go.
Lifestyle inflation is HUGE! It’s almost too easy to give yourself a pat on the back when things start looking up. Learning to be content is one of the greatest money principles we can learn! Thanks for pointing that out!
Great feedback! The PF community is awesome here. It’s tricky with lifestyle inflation. I read this great post at The Simple Dollar on the pitfalls of hedonic adaptation. So applicable here. I’ll have to find that link.
You mean this one? https://www.thesimpledollar.com/the-magic-of-hedonic-adaptation/
Ha! Yes that’s the one.
https://www.thesimpledollar.com/the-magic-of-hedonic-adaptation/
Great list of suggestions. I would tell myself to stress less and to enjoy the process. Do the next right thing and everything will workout the way it was supposed to. The most important rate is your saving rate and that is driven by how well you budget. Take your weekly savings and invest it in a few different index funds. Keep it up for a few decades and you will be set up nicely.
I think sometimes the hardest thing with personal finance is just the waiting aspect. Time is our biggest opponent much of the time. You bring up some awesome advice though!
Dude. If I could only go back and sit down with my 18-Year Old self. There is so much that I would say.
The first thing?
Time is going to go by SO much quicker than you think. Get your financial life in order, as soon as possible.
There was more, but the system said, “Your comment is too long. Try to be more concise.” 🙂
Any who, there will be a follow up at Money is not Taboo.
Great stuff Steve!
Sorry you ran into that! Didn’t know there was a length maximum lol! Can’t wait to see the article!