10 money lessons I wish I’d heard — or listened to — when I was younger

Market Watch ^ | 02/17/2020 | Jonathan Clements

[SeekAndFind]

I have devoted my entire adult life to learning about money. That might sound like cruel-and-unusual punishment, but I’ve mostly enjoyed it. For more than three decades, I’ve spent my days perusing the business pages, reading finance books, scanning academic studies and talking to countless folks about their finances.

Yet, despite this intense financial education, it took me a decade or more to learn many of life’s most important money lessons and, indeed, some key insights have only come to me in recent years. Here are 10 things I wish I’d been told in my 20s—or told more loudly, so I actually listened:

1. A small home is the key to a big portfolio. My first wife and I bought a modest house, because we worried that we couldn’t really afford anything bigger. I ended up living in that house for two decades.

Financially, it turned out to be one of the smartest things I’ve ever done, because it allowed me to save great gobs of money. That’s clear to me in retrospect. But I wish I’d known it was a smart move at the time, because I wouldn’t have wasted so many hours wondering whether I should have bought a larger place.

2. Debts are negative bonds. From my first month as a homeowner, I sent in extra money with my mortgage payment, so I could pay off the loan more quickly. But it was only later that I came to view my mortgage as a negative bond—one that was costing me dearly. Indeed, paying off debt almost always garners a higher after-tax return than you can earn by investing in high-quality bonds.

3. Watching the market and your portfolio doesn’t improve performance. This has been another huge time waster. It’s a bad habit I’m belatedly trying to break.

[outofsalt]

pfl

[cgbg]

The small house idea is a good one—if you can get a small house with a _lot_ of land that is even better.

The best neighbors are rarely seen or heard. ;-)

The stock market idea is 20-20 hind-sight. Today’s stock market is valued at historically high levels, and I would encourage young people to stay out of it for a few years, and then buy in _after_ the inevitable crash.

If possible, you want to avoid multiple moves for your job.
Moving is expensive (with hidden costs often not paid for by employers) and you will be a lot happier if you can live in a community where you know a lot of folks.

My final advice is try really hard to find work you enjoy—you will always be at your best when you are having a good time.

[taxcontrol]

Advice to my kids regarding financial success:

1) Do 1 thing. Do it well. Do it so well that you are recognized by others for how well you do that one thing.

2) After #1, learn to do other closely related thing .... and do it well

3) Plan your work and work your plan

4) Dave Ramsey

5) Debt is financial slavery.

[caww]

A few years ago I became debt free...I cannot express strongly enough how that affects ‘every’ area of your life.

[CIB-173RDABN]

All good advice. I will add my 2 cents to it.

To young people - to rise out of poverty

1. Stay in School graduate from High School
2. Don’t do drugs (includes tobacco)
3. Don’t commit crimes
4. Don’t have kids until after marriage
5. Think about your future and what kind of work you would like to do. Remember someone who works with their hands often make more then college graduates.

More general advice

1. Spend less than you bring in.
2. Know the difference between “wants” and “needs”
3. Create a budget. Stick to it.
4. Debt is slavery by another name.
5. Never co-sign for someone’s loan.
6. Never get a student loan.

[2banana]

#1 Should be:

LIVE BENEATH YOUR MEANS

[tet68]

Time wounds all deals.
Make your money when you buy.

[Dilbert San Diego]

In living beneath your means, you will then be able to save money. Things happen in life which come up unexpectedly, and which cost money. You are better able to deal with such things, if you have some savings, as opposed to pulling out the credit card, and then wondering how you are going to pay off that credit card.

[AppyPappy]

10. Relax, things will work out.

Zoomers triggered. “But my mental health....”. Zoomers hate to hear that things will work out because they have a cocktail of mental illnesses that can only be rectified by the fact that the Climate will kill them soon.

[Dacula]

bkmk

[tet68]

Price is a one time thing.
Cost is a long time thing.
Know the difference between the two.
Having cash on hand means you can take
advantage of opportunity.

[SPRINK]

I think most frugal people are born that way...

it has always pained me to spend money on trivial things.
I now pay cash for cars...I pay cash for houses

all because when I was in my 20’s and 30’s I saved rather than spent.....didn’t have to take a class...didn’t need someone to tell me how. It all came nauturally

[dfwgator]

It’s amazing the difference between starting to save in your 20s as opposed to your 30s, you could literally spend everything you make in your 50s, and wind up with the same amount of money at age 65, as someone who waited until their 30s to start saving.

[Don Corleone]

Pay Yourself First!!!"

[G Larry]

2 big ones:

- Don't waste money on useless crap and fashions.

- Start saving early, cuz you don't need all that useless crap.

[Bell Bouy II]

I feel knowing the dif between needs and wants takes care of that.
An occasional want is a way of treating ourselves, occasional being the operative word and making that want a lower priority of our needs is good too.

TV Refrig upgrade to the home ect

[cgbg]

Also: My mom’s great advice—Charity begins at home... ;-)

[Sequoyah101]

This is what I told my children and they listened. It has worked out well for them and me. Live below your means, you don’t have to live like a pauper to do it.

We never had a house payment, including taxes and insurance, over $1,000 a month until we started paying cash for houses and cars. We drove our first cars until they were paid for and then until we had enough to pay cash for another one.

I also told them that you save for houses, cars, kids and school. You invest for all other things. Regularly, at least 25% of your gross income, quality companies that make things people need, use and that wear out. Watch them, be aware of problems and have a plan to deal with them as in sell and move on but not on every blip of the ticker or bad quarter. Business is cyclical and so are stocks.

My biggest failing in finances is we have too much stuff. Part of the reason is that it was hard to come by and hard to let go of. Focus on quality over quantity and do without if you can’t afford quality worth keeping.

[SamAdams76]

I agree with the "small house" as well. I started off with a small house in my 20s and just recently downsized to a condo in my mid-50s. In between, I had a few "McMansions". But in the end, you really don't need all that house. The kids grow up and you accumulate a lot of junk with money that could have been spent on better things.

Had I stayed in my original house, which had a lot of privacy and bordered a state forest, I would have literally saved hundreds of thousands of dollars over the years.