What is the best financial advice you have received?

[lawyerlee]

What is the best financial advice you have received? I thought it might be nice to pool our collective "widsom" and share it with as many people as we can! I know I can certainly use the help. :)

I have to say, the best advice I've ever received came to me quite recently - just this past weekend - in the form of this article:

Accelerator Margin: The Snowball Express (http://credit.about.com/cs/frugality/a/071397.htm)

This is a version of what Cliff and I have been trying to do to pay down our debt, but we needed the concrete advice this article provides to make things happen. :)

[southerner]

Pay yourself first!

We always put a little bit of our paychecks away before we pay any bills.

[Delaney21]

Track every penny you spend! You'll be surprised where your money is going!

We use Microsoft money and it has helped us save a ton of money. It wasn't until we saw that we were spending over $400 a month on dining out that we started eating in more often.

[katmg]

Live within your means.

I've always followed that and as a result I've never had credit card debt. (Well, I've also been lucky that I haven't had some sort of extinuating circumstance that would require that I charge something - like medical bills) I've also really appreciated some of the things I've purchased - my car, (I saved up for 4 years for the downpayment!) my sofa (my first big purchase after I got my first job), etc.

[Kimberland30]

Take all credit cards, debit cards and checkbook away from DH!!! :D

[villanelle75]

Don't expect right away to live like your parent's live. I think this is one of the biggest problems that younger people run into. They see all the things that other people have and assume they should have them as well. There is no sense that that is a lifestyle you have to work up to. When my parent's started out, they too were fairly poor and dind't have a nice house and had to pinch pennies adn all that. It was only after years of reasonsible living that they could afford real vacations and nicer cars and new furniture.

[elladee]

Live within your means.

This is mine as well. Though my parents may have come right out and said it a few times, what helped the most was that the live this message. Now it doesn't even occur to me to buy something I can't afford.

Don't expect right away to live like your parent's live.

I wish someone had told me this. I never went out an tried to live like my parents (see the above message), but I have spent a lot of energy being upset about not being able to. Eventually I figured this out for myself, but it would have been so much easier if someone had told me.

[camberne]

My grandfather has always lived by the following:

* Never invest any money that you can't afford to lose.

* If you can't pay cash for it, you can't afford it. (The only exception to this rule for him was home mortgages.)

[twinnyme]

Start your 401K as soon as you can and continue to contribute to it. I started mine at 22, as soon as I was eligible in my first company, and now 12 years later, it/they (I have diversified over time into a few acccounts, after working at a few places) have grown substantially. My friend told me this when I started working and I have always been grateful to her.

[Marilyn]

I think most of us are out of college now but I wish someone would have warned me about charging up all those credit cards you get so easily when you are in college. Most of my friends in college did the same thing. I always warn people starting college not to get caught in that trap. You always think it will be easy to pay them off but you get in over your head. It isn't a great way to start out your financial life when you can't pay them off.

[emmjay]

Best financial advice I have heard:

If you can't afford to save for retirement, you are living above your means.

Save as much as possible in your 401(k). Even if you think it will be tough at first, you will adjust to it and it will be worth it in the long run.

Another way to save - when you get a raise, only "give" yourself half of it and transfer the other half into your retirement savings. You'll still be getting a raise, but you'll be saving more too.

Don't expect right away to live like your parent's live.
This is GREAT advice! All of my friends seem to have the mentality that they want everything right now - I don't really know the details of all of their financial situations, but sometimes I wonder how much debt they are in.

[Hello Kitty]

All of these are so good, and stuff we apply.

My dad recently said: don't accumulate too many monthly payments

I think it's really important to keep in perspective, especially now when you can finance anything - for crying out loud, we financed our couch :rolleyes: In my defense, it's 0% financing for a year, and I'd rather earn interest on our savings account than pay out the cash. But we cannot get any more monthly payments. I've had enough!

[craftyT]

Track every penny you spend! You'll be surprised where your money is going!

adding to Delaney21's advice...

Giving money a purpose is how you make money work for you rather than you working for your money. If you don't give your money a purpose - someone else will.

This means: decide where your money goes every month (in advance using a budget) otherwise it will go somewhere (or to someone) you don't want it to go to b/c you aren't paying attention.

DH and I "found" several hundred dollars (that otherwise would have been given away or lost) over the course of a year - no joke.

[Asha]

don't help out others (financially) until you help yourself first.

it will take you eons to pay off your credit cards if you only pay the minimum.

enjoy the little things in life (this was never really stated to me, but it was the way i was raised. if you can enjoy the little things, you don't need to spend a lot of money making yourself happy with luxurious things. though, i have to admit i do enjoy those things every once in awhile too.)

[Elle]

In regards to retirement savings:

"The government will always help your child to go to school, but they will never give you money and help you to retire."

[twinnyme]

I think most of us are out of college now but I wish someone would have warned me about charging up all those credit cards you get so easily when you are in college. Most of my friends in college did the same thing. I always warn people starting college not to get caught in that trap. You always think it will be easy to pay them off but you get in over your head. It isn't a great way to start out your financial life when you can't pay them off.

I agree. I am formerly a college academic advisor and I made it my business (when appropriate) to warn students about this. I think a money management workshop should be mandatory for all entering college students, specifically because of the credit card companies. (Some orientation programs now include something like this.) I also think it's a crime that those companies are allowed to market on college campuses.... but, hey, it's a free society, I guess! :) I just know all the damage it can do.

ETA: Another piece of advice I've gotten that I think is important is "don't be house-poor." DH actually said this when we were looking for a house. Yes, that means we live in a 2BR townhouse for a few years, and even possibly still when we have a 2nd child, but we make it work and in the meantime we're saving for a larger house that has what we really want in it. At least in the meantime we're building equity rather than paying rent.

And I agree with what other posters have said about not expecting to live your parent's life right away. I think at some points I've fallen into that trap and it's hard not to have everything right away... but that's what we're doing.

We also live by a budget now. I just quit my full-time job to take a part-time job and do freelance editing on the side (in order to have more time with my 7-month-old DD) and we instituted a very strict budget. We're doing so well on it, and I'm proud to say that my charges on my credit card in the past month is the lowest it's ever been in my life!

[bethnjim]

My husband and I for the past three years have lived on what we made three years ago. Every raise we get goes directly into savings so we never really "see" or "feel" a raise, but our savings account does!! :D The best bit of advice we got was the 401k advice. We were told to start ASAP putting money and we have and the money is looking good for our age already!!

[dreamgirly]

Two things I've picked up along the way:

*Have insurance for anything and everything you can't afford to lose - your house, your car, your health, your life, your ring, etc. I have free life & health insurance through my work, and the car & house insurance is required... The time that you don't have it is when you will need it and I have seen sooooooo many get burned by not having health or life insurance. I work in a financial aid office at a college and hear sob stories everyday. :(

*Live BELOW your means. Always buy the nicest house that you can *AFFORD.* We are putting away over 40% of our gross pay into retirement & long/short-term savings. We're pretty jazzed about that. No, we don't have fancy cars, we definitely don't impress anyone with the material things that we have, but we are certainly doing well w/ the savings aspect. We have no debt, we have paid off over 1/3 of our 15 yr mortgage and we've only had it a year. :)

[Koala_Gurl]

Yep, we "live below our means!" Definitely! I would rather scrimp now and enjoy later. :)

I have always paid my CC bill in full every month, thanks to lecture from dad (before I ever got a CC). That is key! (Ok, maybe once or twice did I carry a balance, but I was sick over it until it was paid off...two months later.)

[Jodi AKA BostonTeacher]

Protect your credit score. Get a report annually and clear up any mistakes immediately.

[Janey]

* If you can't pay cash for it, you can't afford it. (The only exception to this rule for him was home mortgages.)
That was my dad's advice, as well. He included cars into that "pay cash" thing. Because of that advice, I've never had any sort of Debt, except a mortgage (and I did get a car payment to have some credit at one point).