Forty-five. That’s the age I turn today – March 7, 2018.
A lot has changed in our world since 1973. Almost every area of life I can think of has made advancements. Mostly these have been for the good of society and have ushered in new eras for technology, medicine, science, politics and sports just to name a few.
One thing really hasn’t changed though. And that is our need for money. We need it now just as much as my parents did when I was born. Money provides us with the means to secure the most basics needs for our survival – food, clothing, shelter, utilities and transportation. If any one of those key areas is missing in the equation, then we are more or less suffering to some degree.
I’ve been blessed in that I’ve never had to worry about meeting these needs. However, that doesn’t mean it hasn’t been a challenge at times. But both my parents when I was young and now myself leading my own family have always been able to manage. I’ve truly been blessed in that way.
In my 45 years of life, I’ve learned some valuable lessons about money and finances. So today I’d like to give you 10 quick bits of financial wisdom that have helped shape me over the years. I won’t get bogged down in the details about how I learned these lessons. If you want to read more details, click on the links I’ll provide.
Life Lessons About Money and Finances
What has 45 years of life taught me about money and finances? Well, in no particular order…
1. Be honest. You must embrace the reality of the situation you have been given – whether good or bad. You cannot lie to or deceive yourself about the circumstances you are facing. And you can’t lie to others when they try to ask questions and help. To do either of those things will lead to wrong decisions and patterns of behavior that are unhealthy – a lesson a learned as a young kid.
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2. Be alert for and embrace pivotal moments. There will be times – maybe a singular moment – when you’ll be faced with a critical financial decision. Don’t let it pass you by because you are distracted and not paying attention. These situations could be life altering. They don’t have to be big moments either as I found out one day while shopping for shoes. Either way, take a stand and don’t give in to the temptation to go against what you value.
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3. Master the spend vs. save dilemma. Maybe above all yes you have to master the battle between saving and spending. You cannot afford to spend more than you make if you want to have financial success.
Spending is great. It’s even necessary. I love getting stuff that meets my needs/wants and makes me feel good.
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But I learned through many hardships that excessive spending isn’t healthy. That kind of behavior allowed me to live in the moment without thinking about the long-term consequences. Put simply – there is no substitute for valuing saving over spending.
4. Budgets are your friend. The tension of the save vs. spend dilemma can mostly be alleviated by creating a budget. My wife and I really didn’t have a budget for the first ten years of our marriage. Once we implemented one in our early 30’s and then began to really stick to it, our financial situation began to take off.
Not only did our budget help create discipline and build wealth for our family, it helped bring us closer together. Sitting down each month forced us to communicate better. As we did, we began to realize what the other person valued.
It wasn’t always easy. But I can honestly say that doing a budget together helped move our relationship forward by leaps and bounds.
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5. Partner with someone in the journey. This is all about having a special relationship with someone that can help you in your financial journey. As you just read, my wife and I worked on our money together. We each had ideas and opinions that were legitimate. Being accountable to one another and asking the other person for their input helped us make wise decisions as we planned.
So don’t go it alone. If you are married, develop a joint partnership with your spouse to manage your money. If you are single, find an accountability partner who is good with money to talk with. You might even need to take a class like Financial Peace University. The strength of two or more working on something is definitely better than one.
6. Don’t be afraid of debt but don’t embrace it. Debt isn’t evil. Being in debt doesn’t make you a bad person. There is a case to be made that some debt is good (like a mortgage). Others have found great value in using credit cards as a way to manage their business expenses or accumulate rewards.
But as a general rule, you should have as little debt as possible. And I believe in an even deeper value – that you should be continually striving to get out of and pay off the debts you have. Don’t let them hang around unnecessarily. Getting out of debt eliminates a lot of financial risk from your life. And the freedom that comes from living a debt free life is truly amazing.
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7. Invest early and think long-term. Oh man, do I wish I could tell my 25-yr. old self to spend less and invest more. But who thinks about investing at that age? You are essentially fresh out of college, in a new career, single or in a new marriage, pre-kids and ready to take on the world.
Of all the financial mistakes I made, this one might be the biggest. Why? Because I can never get that time back. The length of time you are able to invest is a huge factor to building long-term wealth through the stock market.
8. Real estate is a big winner. My wife and I moved into the fourth lodging of our marriage this past July (#1 – apartment, #2 – ranch style, starter house, #3 – two-story, 4 bedroom, #4 – two-story, 5-bedroom with finished basement). Each move allowed us to upgrade the size, features and amenities of the residence. A major reason for that is because we were able to build equity along the way as we paid the mortgage at each location. As the equity in each home grew, we had more saved to put towards the next house when we decided to sell and move.
In addition, as our financial state improved, we were able to purchase rental properties. These provide a steady stream of income for very little effort on our part.
Real estate has great value as a store of income, as a stream of income and as an appreciating asset. Get in it if you can – but only when you are ready.
9. Give away as much as you can. Nothing has helped keep us more balanced, appreciate what we have and keep things in perspective than giving to others. Giving money to and helping others or a cause does something to rock your spirit in a good way. It helps you get the focus off yourself. As you give, you begin to realize there is something out there bigger than yourself.
I’m not suggesting giving everything away. You need to take care of your own house. However, giving will bring a lot of peace to your life. You will receive a blessing from it on the inside.
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10. The grass isn’t always greener. Not every situation that looks like a financial gain for you is one you should necessarily take. It’s easy to go for that new job or big promotion. But there are factors other than money to consider before making a big move. Going after the money alone without thinking the situation through probably will lead to trouble.
That’s my top ten. But what are yours? Share some thoughts in the comments below.
Questions for Discussion: Which item on this list would you identify with most? What advice would you add? Do you regret not taking financial matters more seriously when you were younger?
I don’t entirely agree with the premise that real estate is a big winner. If you go far back enough in history, it hasn’t always been like this. The surge in purchase and rental prices is more a phenomenon over the past 20 years. Historically real estate has been flat when you adjust it for inflation.
Thanks for the comment Tony! My perspective is that it forces savings on the homeowner through the paying down of the mortgage. That’s what it did for us – we had more and more equity saved up each time we sold and purchased a new home. Over 20 years, that can contribute a lot to ones net worth. Owning real estate as an investment opens up another discussion which I think you are getting at.