In light of
Mother’s Day I thought it would be helpful to reflect and impart some of the
financial wisdom my mother shared with me. These quick, simple nuggets of
advice continue to prove useful as I navigate adulthood.
1. Create a
budget
Soon after
graduating college I was able to secure an investment job in the region I
wanted. However, this required that I move out of home and begin living on my
own. Facing this new chapter in my life, my mother took time to write out a budget with me detailing my
cash inflows versus outflows and determined how much I could expect to have
left over. She emphasized that the key was to have something left over each
month to save or invest while still living comfortably. Overall, I learned that
a budget is nothing more than a road map that helps you maintain control of your
finances.
2. Maintain
a healthy savings reserve
Growing up I
did various jobs during my summer breaks from school. During this time my
mother instilled in me the importance of keeping the money I made in my savings
account. In fact, if I didn’t need to spend it, this was actually a
requirement. Personally, I enjoyed watching my account size grow over the
summer months as if to visually reaffirm my hard work. Because she instilled
this savings mindset in me while I was young I was able to begin to learn about
financial concepts, such as compounded interest, and use them to my advantage over the years to come.
3.
Contribute to a 401K and invest
Mom made it
a point to express how important it would be for me to save for my future with
an employer-offered 401K program. A 401K is a retirement account where most employers will match and contribute an
additional amount up to around 5%. The thought of free, additional money
intrigued me as I had already seen how my summer savings had begun to grow into
a sizable amount over the previous years.
4. Buy on
sale, wait for a better deal, but don’t deprive yourself
Having grown
up on a farm my mother developed an extreme resourcefulness that transcended
into the family finances. She was always one to spot a good deal, even with
something as minor as pillows! She impressed on me the importance of buying
items on sale as much as possible. This mostly came in the form of coupons for
routine expenses and advertised discounts for large ticket purchases. Delayed
gratification was an area she where she excelled. If there wasn’t an immediate
need she would create a savings plan for the item and look for discounts in
order to find the best price when it did come along.
5. Make it a
point to treat yourself
After making
an effort to budget, save, invest, minimize expenses, and delay non-essential
large purchases my mother would still take time to treat herself and the
family. From my own experience this is the most rewarding part of putting together
a financial plan. Having money left over that can be used for fun is the coolest
part! Use these extra resources for something you really want like travel,
getting a particular entertainment experience, dining at a certain restaurant,
or making a unique meal.
I was
fortunate to have a mother who shared these pieces of financial advice with me.
Hopefully there are points above that can be used to help you and others who
may be looking for some simple guidelines to improve your finances immediately.
As always,
if you have questions or comments, feel free to send me a message. Thanks for
reading.
John
Well written John.
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