If I had the opportunity to give a note to my younger self with life lessons on it, I would start with financial advice. First, I’d encourage her to engage with money matters as soon as possible and, also, to make money a friend. In the end, I made three fundamental financial mistakes and I plan to teach my daughter, using my own examples, so she creates takes a healthier financial path.
A note to my younger self would include many things. But as far as money matters go, these three bits of financial advice would be at the top:
1. Understand the context of the financial system
2. Don’t cash out your 401(k), ever
3. Create a budget focusing on giving, saving, spending according to your values
I can’t remember a time in life when I did not work in some capacity. I even managed to save $5,000 during high school to use toward college. I had no idea how quickly that $5,000 would be used! I managed to muddle through college and started using my first credit card, all the while not really understanding how the financial system worked, until I started my first job at a bank. Knowing what I do know now, having context on the broader financial system would have saved me much confusion in my younger years.
When I moved from New Orleans to North Carolina, I made the mistake so many younger professionals make – I cashed out my 401(k) to pay for moving related expenses. I know, I know – not bright, but at the time, retirement seemed so far away and, yet, my need for a washer/dryer and new furniture so real!
Finally, it was during my third job after college that I developed a budget for expenses and spending. These days you can get free financial advice and budget calculators everywhere, at your finger tips. (Note to self, include this in the note to self). Though through the years, my budget it has evolved tremendously as my finances have gotten more complex. I have evolved it from a spending budget, to a savings budget, to now include the plan for giving to non-profits that are important to my family. I hope to have it in terrific shape to send with my daughter as she goes to college in nine years – hoping that the financial evolution will continue to improve through the generations.What advice would you give your younger self about money matters?