By: Laura Walton AFC®
I recently asked friends and family to name a couple of things that they thought had been important in becoming financially secure. Their answers are below and although they echo the advice we routinely hear from experts they seem to carry more weight coming from the guy or gal on the street.
Question: Name a couple of things that you think have been important in becoming financially secure.
Educate yourself, be an informed buyer but don’t get sold, slow and steady wins the race.
Contributing to an IRA starting in my 20’s.
Religiously investing as much as I possible could before I spent the rest. Not touching my investments for trivial possessions or pleasures but letting them grow.
Saving early and finding an employer that still offers a pension…even a partial pension is helpful.
Was it a typo that I received this mailing?? I don’t even want to think about it let alone talk about it!!!
Luck and discipline.
Doing without. Living below my means, keeping basic living expenses (transportation, utilities, clothing, food, entertainment) low. Saving money regardless of how much I could save; it’s the habit that counts in the beginning. Keeping a log of daily expenditures. Taking advantage of 1031 tax-deferred exchanges. Sharing your financial success by giving until it hurts. At the end of the day, it comes down to making more right decisions than wrong ones.
No matter how hard it is, have a certain amount of money withdrawn from your paycheck every week. You will never miss it in the long run. Save for the things you want and then pay cash. Do not finance something if you cannot immediately afford it – unless it is a house or piece of land or something else really big. Rethink that $5 daily Starbucks habit and any other financial adjustments you can comfortably make – every little bit helps and you could save a lot more with small tweaks. When someone writes you a check, do not put it in your checking account; put it in your savings account.
Living within my paycheck.
Save, save, save starting young, like high school – establishing savings plans early on for retirement, vacations, etc.
The most important part of my becoming financially secure was disciplined investing early and annual rebalancing to an appropriate asset allocation.
A couple things that have been important to me in becoming financially secure are patience and having a long-term view. And just as important, if not more, is controlling spending, not making impulsive purchases, and being happy with what I have.
Learning early the value of hard work and money. I was given a car when I was 16, but I had to pay for gas, insurance and upkeep. College and living expenses were paid for, but when fun started to exceed my funds, I quickly cut back on my outings and got a second job to stay on track. I was given a leg up on the big ticket items, but I learned what it took to get and keep those on my own.
My mother always taught me to look like a million dollars, whether I had it or not.
Doing something that you love and feel has value to others. Growing my nest egg (even through a poor economy). Focusing on value in big purchases and holding on to the products (buying a nice car with cash and keeping it maintained), never being in debt, feeling comfortable spending money on what I really love to do (international activity trips) helped me decide what not to spend money on.
First and foremost, seeking advice from our financial advisor at an early age put us on track to financial security. He advised us about starting IRAs, contributing every year and never taking money out of our funds (as much as I was tempted). Our accountant also helped keep us on track with similar advice.