Lately I’ve developed a not so good habit of reading copious list articles on personal finance. You know the ones that go…
10 money things you need to know before turning 30
7 finance fundamentals you should know
8 ways to get better at money management
They’re addicting, aren’t they? This past weekend, I spent more time than I needed to scanning through LifeHack and Rockstar Finance reading several different list articles. I digress, it’s because I’m trying to learn more about finance and get better at managing and growing my money.
Throughout the trials and tribulations with life, I’ve learned something: being knowledgable about money is super duper important. I’ve always known this but have also resisted it. I would scribble down things I had spent money on for a certain day but then not want to actually go through with making a budget. I’d read about credit card rewards but then scurry away from them because I thought credit cards were horrible things to have.
Money is something we have to interact with everyday and whether we like it or not, many of our decisions involve money in some way or form.
As I’ve become more involved with my money and the personal finance world, I’ve learned some things. This list isn’t comprehensive of any and all money lessons (that’d take a while to talk about!). It’s just a few key takeaways I’ve learned so far.
1. Focus on building wealth in your early working years
Building wealth and investing early is one of the most talked about things in the personal finance world. Most have seem the various charts showing 20-year old investor A and 40-year-old investor B. Investor A usually always comes out on top with more returns on their investments over the long run.
A while back while in my remaining semester for college, I was looking for information on retirement planning. I felt lost and needed actionable information. No one around me (twenty-somethings as well as older adults) talked about retirement planning.
Whenever I spoke about it with older adults in their 30-50’s, they would get this frightened look on their face and just say “Do it! Do it! Save anything you can!” over and over without giving any clear advice on how to go about doing it.
Things are moving along better now. I’ve been reading more about index funds, Lifehacker’s April money challenge, and even picked up The Index Card: Why Personal Finance Doesn’t Have to be Complicated (Loving it! Will write up a review on it soon).
2. Just because everyone else is buying the next “life” thing doesn’t mean you have to
When I graduated college (about 1.5 years ago), I continued to drive my rickety Ford Focus with 185,000+ miles on it. I knew I didn’t want to buy a new car and have to take on a car payment. So I made a savings goal and started putting money toward buying a preowned car in the future.
Everyone questioned me on this.
The most memorable occasion was when I was over at my mom’s house one day. My brother made a sly remark about how it was “embarrassing” that I was still driving my old car. He went on and talked about how I “needed to stop being cheap” and just go ahead and buy a new car. (This is a guy who bought a truck he didn’t need and wastes his money on irrelevant things every month).
Buying a house and financing a new car were two big things repeated over and over. A lot of people around my age started buying new cars, getting really nice apartments, and so forth.
Do I regret not taking on 20-30K in additional debt by getting a car? Heck no! Not being tied to a car payment is what helped ease the transition to moving to Thailand.
3. Having good credit is super important
The importance of good credit has really been ingrained in me recently. Having good credit is so critical to financial wellness. I’ve been vigilant and made sure to pay my bills on time and my credit card balance in full every month.
A person’s credit score is now even started to affect their employment prospects. W0o0w!
4. Credit cards can be useful (i.e. not evil) things to have
All throughout high school and college, my parents as well as other adults would give horror stories about people saddled with high-interest credit credit card debt. Credit cards were made to seem like the devil’s advocate.
I would picture Janice Ian from Mean Girls whispering: Evil takes the plastic form with credit cards.
Credit cards are not evil. When used responsibly, they can be really beneficial.
There are three big benefits to using credit cards: building credit, security, and rewards! Resolving charges from getting a stolen credit card is easier than with a debit card. Credit cards provide a myriad of rewards based on the type you get and they help you build credit.
As long as you are responsible with them and pay your balance off in full every month, they are pretty useful things to have.
5. Finance wellness takes practice and patience
When I started getting into personal finance more, I quickly got discouraged. Everywhere I looked, I would read things about people having 10,000+ in their emergency funds, bloggers making 10K+ per month, people maxing out their IRA’s every year and so forth.
Reading all these success stories made me feel less than stellar with my efforts. Almost as if I was doing personal finance the “wrong way”. I’ve moved away from that bad feeling and follow something better now.
Do what you can, with what you have, where you are —Theodore Roosevelt
There are different stages to financial wellness and big things usually don’t happen overnight. The important thing is to just start. Make small steps towards a bigger goal. Everyone has to start somewhere.
I’m sure as time goes on, I will learn more “money truths”. I’m only 21 after all. Still a long way to go!
What are some things you know to be true about money? What has your journey in personal finance looked like?
