Traversing the unfamiliar world of personal finance can be daunting if you do it alone. Believe it or not, most men and women receive little-to-no financial advice when they’re younger. However, there is good news: Hope is not lost! Recently, people converged in an online discussion to reveal essential tips and strategies for anyone who grew up without financially savvy parents.
Table of Contents
1. Treat Your Savings as Paying Bills
It’s time to rethink how you view your savings account. Moving forward, look at it as a monthly bill, not another account! “Treat savings as paying a bill,” advises one expert. “However much you can afford, let’s say $25 a week, that’s a bill now. It goes into a savings account, preferably automatically, without your intervention, and you include that in any budgeting you do. The best thing you can do with savings is pretend it doesn’t exist until necessary.”
2. Always Think Toward the Future
Sometimes, falling back on common sense is best, especially considering your financial situation. With that being said, you should always look ahead toward your future. If you can help it, never sacrifice your long-term financial wellness in exchange for a fleeting feeling of happiness in the short term.
I know it doesn’t sound easy, but even at an early age, every major financial decision can have a massive impact on your future, so keep that in mind!
3. Remember You’re Not Alone
Along with millions of other kids, I received zero advice from my parents regarding finances. I had to learn harsh lessons on my own. So whenever you feel overwhelmed or trapped, remember: You’re not alone.
Countless young men and women are feeling precisely how you feel. Things can always improve; you just have to be open to adjusting on the fly sometimes.
4. Give Some Purchases Extra Thought
Whether a big-ticket item or a quasi-impulse purchase, it’s always best to take a day or so before committing to anything significant. “Before buying anything, ask yourself, ‘Do I need this?'” explains one man. “If it’s a nonessential item (so things other than the bare necessities, like food), make yourself wait at least 24 hours before purchasing. If you still want it after 24 hours, then you can consider getting it. You’ll be surprised at how infrequently you still want the item after that time!” Trust me, you’ll save tons of money by employing this strategy.
5. Don’t Get Into Credit Card Debt
The lure of a credit card can be too tempting to resist, but do your best to avoid it until you have a mature grasp of your financial situation. I foolishly signed up for a credit card in college and failed to pay any of it off, leading to my 20s being an endless loop of avoiding bill collectors’ phone calls. When you reach a certain financial maturity, then by all means, open a credit card (or five), but until then, stay away. Getting into credit card debt is a hole that is difficult to dig out of.
6. Keep Working
As Blink-182 once sang, “Work sucks, I know.” But unfortunately, working is a fact of life, and every week or month (or year!) you aren’t working will be detrimental to your future. The best advice is this: Always be hustling, always be grinding, and always be working! Consistent money coming in is vital to your financial success (as obvious as that sounds).
7. Keep Track of All Expenses
Although budgeting seems boring, it’s one of the most efficient ways to look at your finances from a different viewpoint. “Writing down literally everything I spend in a little notebook, down to the cent, and doing a spending/earning reconciliation at the end of each month goes a long way into getting a firm grasp on my financial situation,” explains one woman. You’d be amazed how differently you look at money once you have everything on paper!
8. Never Stop Learning
Like most things in life, you should never be content with what you already know; always keep learning! Navigating finances without guidance is hard enough, but you can ease the pressure on yourself by continually educating yourself. From taking personal finance classes to watching informational YouTube videos to visiting helpful websites like this one, your journey to financial freedom will always be ongoing, so never stop learning.
9. Don’t Compare Your Friends to Yourself
It can be difficult to avoid comparing yourself to your friends. But keep in mind that perception is not reality! One person puts it all into perspective. “One thing to remember is if your friends always seem to have money and are buying or doing cool things, they are likely in debt or have no savings,” reveals one woman. “Lots of people aren’t good with money.”
10. Don’t Throw Money Away
Early in life, you’ll find yourself in many situations that seemingly exist to test you. Quasi-friends will ask you for money, you’ll feel pressured to buy a car or jewelry you can’t afford, or maybe you’ll debate investing in a shady business venture. Keep your head on straight: Don’t throw your money away. Spending money on everyday purchases is fine, but resist the urge to throw away your future on a hare-brained scheme.
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This thread inspired this post.
I’m John Schmoll, a former stockbroker, MBA-grad, published finance writer, and founder of Frugal Rules.
As a veteran of the financial services industry, I’ve worked as a mutual fund administrator, banker, and stockbroker and was Series 7 and 63-licensed, but I left all that behind in 2012 to help people learn how to manage their money.
My goal is to help you gain the knowledge you need to become financially independent with personally-tested financial tools and money-saving solutions.