As I start this blog, the title was a question to myself about how to start this blog, but at the same time it’s a question that most people ponder when faced with some financial situation or even teaching their kids about money.
My earliest memory using money was with coins used to purchase candy across our house. I didn’t know how much candy I can get for the coin I carry, but the only thing I cared about was that I was able to buy at least any candy. At first I wasn’t picky at all, but then later on I started understanding that the more money I had the better the candy I can get. It was very simple for me. One of the other fond memories I had with money was my first bank account that my dad had opened for me. It started with only twenty Philippine pesos and I would watch it grow with interest over the months and years to come.
It wasn’t until after college that I started getting familiar with more ways to grow my money and by then I have accumulated about $25,000. You could say that I was an avid money saver throughout my childhood that carried on to my adulthood. I remember reading the book financials for dummies and it was a revelation for me. This book contained so much information I’ve never known before and it was never really taught in school. My dad only scratched the surface when he opened that bank account for me many years ago. I was very excited reading the book and it took me only a couple of days to read it front and back then again a few more times.
Financial for Dummies is a great book, but I know now that there are more up to date books out there that are even better. Don’t get me wrong though, the book for dummies gave me a great foundation to start my path to being financially savvy and it allowed me to also educate my family and friends and especially anyone who would care to listen and get their financial situation in order.
Here are some tips that I took away from reading just one outdated book about financing
Begin as early as you can and as much as you can
One of my regrets about the whole thing was that I didn’t start early enough. Sure, I had some money stashed away by the time I graduated college, but I think knowing about how to multiply my money in different ways could have helped me more.
Now that I’m a father, I would like to start my daughter as early as I can. The gifts that she is receiving in cash value is being saved in a kids savings account for her. I know it has a small interest on it, but it will help maintain the value of the money against inflation.
So I would tell anyone that the time is now to start on the right path and get as much as you can into investing your money in different forms even putting your money into a savings account would be a great start.
Annie Nova from CNBC recently released an article titled “With this strategy, ‘you can’t avoid becoming a millionaire’” and in the article it talks about becoming a millionaire after 50 years! But not many people have that luxury of being educated on how to do it or have the money to start doing it.
Tristan Harrison from The Motley Fool wrote in his article ‘How to generate $1,000 a month in passive income’ also emphasizes on spending less and saving as much as you can and the impact time can have over long periods of time in different forms of investments.
I can cite several more articles and financial advisers about the importance of time. Time is money and time is of the essence. Nothing can be more important than time. Start early and keep at it.
Make saving a habit
A lot of advice that I see online talks about making sure that you put some money into your savings whenever you receive some money whether it’s your paycheck or the money that your friend borrowed from you make sure you’re putting a few into your savings. An example of such practice was discussed by a great book from 1962 in “The Richest Man in Babylon” by George Clason.* How much should you put? Well, that’s up to your comfort level. You can start with something small and gradually increase it over time until you feel like it’s too much.
There’s a few ways you can start
- Make sure that part of your paycheck will be automatically deposited in a savings account
- You can install Acorns, which is a mobile app. Acorns takes the amount charged on your credit card and rounds it up to the nearest dollar. That amount used to round it up to the nearest dollar goes into some kind of investing. Acorns is a free app, but be aware though that they do charge some kind of fee every month.
- If your employer has some kind of 401k matching, I highly recommend that you contribute and make full use of that matching. This is free money that will go to your retirement money. If your employer would match 5% of your contribution and you contributed $100, then your employer would give you $5 and that’s free money and that happens on every paycheck! How cool is that?
A short term goal
It’s always better to setup some kind of foreseeable goal than a very large goal. The reason is that it doesn’t leave with you with some kind of analysis paralysis when you look at a small goal. Setting up for a short term goal can also help you stir to a bigger goal. If for some reason that your short term goal fails, at least you can try again rather setting something big but failing.
The small wins that you gain by attaining your short term goal can also be your own motivation to keep setting small goals that would lead to your ultimate long term goal. Short term goals might be something like start
Don’t be afraid to enjoy yourself along the way
This section is not so much about saving money, but more of making a hobby out of absorbing information about finances. I don’t read a lot of advice about this and it’s not to say that you should blow all your savings, but make sure that along your long journey to financial literacy that you reward yourself along the way.
Of course, the less you spend and the more you save the sooner you’ll be in a comfortable financial situation, but that would also mean that you will avoid spending on just about anything. I’m not sure if that is really a way to live. Finding the right balance will be beneficial.
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