As we get older and are put into more and more situations with our finances, we learn more about how to do things and learn from it. At least we'd like to hope. As most people like to help the next generation get a stronger foothold then they had, most are happy to share their story and dish out advice. While searching through my favorite forum today, I came across a great thread about this and thought I'd share it here with you. As I shared my tip, I thought it would be great to call out some of the others in a nice roundup post, adding my two cents where I think it's appropriate! So, here goes!
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!
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!
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