Thankfully when it came to money and personal finance my parents were good role models and taught me how to manage money. Because of this, I was able to start my adult life on a positive financial footing to the point that I was able to
- Have no debt when I graduated from college
- Furnish my first one-bedroom apartment with cash
- Pay off my car loan early
- Have a financial cushion when I was laid off
- Save a down payment to buy my first house
Here is some of the financial advice that my parents shared with me throughout my childhood that has helped me successfully manage my money in adulthood
My parents created budgets for me and my siblings when we were in elementary school. Once we started to earn an allowance my mom provided us with a budget showing us how much of our allowance should go towards giving/tithe, how much towards savings, and how much was left for us to spend.
So when I started working full-time it was only natural that I would set up a budget for myself. By having a budget I was able to grow a comfortable emergency fund and avoid going into debt.
My parents lived below their means for several years and still do. It allowed them to pay off their house early, buy new and newish cars with cash, put three kids through college, and retire pretty much when they wanted to.
Having a budget can help with living below your means because you can plan and track your expenses against your income. For several years, I used the same budget. Even when my income increased. This helped me to save more as my income increased and reach some of my financial goals sooner than anticipated.
I grew up in a Christian household so growing up we were taught to give at least 10% of our income to our church home (it’s a Biblical principle). As you’re blessed with more and more you can give more and honestly I’ve found the more I give the more natural it is and I don’t miss that money.
We’ve all experienced or heard the stories of family members or friends who are always looking for a loan but don’t ever pay the money back. There were a few in my extended family. When those people would come around and ask for money if my parents did give them money it was money they wouldn’t miss if it wasn’t ever paid back.
1. Have a budget
While this is table stakes, a budget is really essential because it helps you to know where you’re money is going so you can make realignments or redirect your money if needed.My parents created budgets for me and my siblings when we were in elementary school. Once we started to earn an allowance my mom provided us with a budget showing us how much of our allowance should go towards giving/tithe, how much towards savings, and how much was left for us to spend.
So when I started working full-time it was only natural that I would set up a budget for myself. By having a budget I was able to grow a comfortable emergency fund and avoid going into debt.
Related read: How To Reset Your Budget For The New Year
2. Live below your means
This is key. Just because you have a $60,000 salary doesn’t mean you need to spend all of it. You should be living on less than you make so that you’re saving money and have extra to invest.My parents lived below their means for several years and still do. It allowed them to pay off their house early, buy new and newish cars with cash, put three kids through college, and retire pretty much when they wanted to.
Having a budget can help with living below your means because you can plan and track your expenses against your income. For several years, I used the same budget. Even when my income increased. This helped me to save more as my income increased and reach some of my financial goals sooner than anticipated.
3. Avoid credit card debt
If you haven’t noticed, credit card interest rates are very high. So carrying a credit card balance month to month can be expensive. The best way to avoid this is by not using a credit card and paying with cash. For many people, they can make that work.
If you’re like me and prefer the ease of using a credit card for all of your purchases instead of cash it’s important to ensure that you have enough money in your bank account to pay your bill in full each month. My parents always told me to treat my credit card like it was cash coming right out of my bank account.
4. Give generously
Believe it or not, giving makes having money fun. Even if you don’t have a lot you always feel good when you give.I grew up in a Christian household so growing up we were taught to give at least 10% of our income to our church home (it’s a Biblical principle). As you’re blessed with more and more you can give more and honestly I’ve found the more I give the more natural it is and I don’t miss that money.
5. Don’t lend money you can’t afford to lose
While my parents told us to give generously, they also said to not give or lend money we can’t afford to lose. When they said money you can’t afford to lose they meant money you need to pay your bills or feed your family.We’ve all experienced or heard the stories of family members or friends who are always looking for a loan but don’t ever pay the money back. There were a few in my extended family. When those people would come around and ask for money if my parents did give them money it was money they wouldn’t miss if it wasn’t ever paid back.
Related read: The Hidden Costs Of Buying A House
6. Don't be house-poor
This is sort of related to living below your means because being house-poor means you are spending a majority of your income on homeownership. This is more than just the mortgage, it’s also accounting for things like insurance, taxes, and utilities. Essentially you bought more house than you could comfortably afford.
The problem with that is you end up having very little money left over to furnish the house, make repairs, or even enjoy life and it can cause you to go further into debt.
When I bought my house I calculated more than how much mortgage I could afford. I looked at costs for upkeep, regular maintenance, utilities, and insurance. That led me to lower the price I was willing to pay for a house as I wanted to make sure I had some cushion and wasn’t putting all of my money into the house.
7. Consistently save some of your income
As I mentioned earlier, my mom created a budget for me and my siblings once we started earning an allowance and part of that budget included setting some money aside as savings. There was a particular percentage we were to put aside but it was so long ago I can’t remember what that was.
It seems now that the train of thought isn’t so much about saving a specific amount each month or paycheck, but how much you save overall. Most resources I found say you should save an emergency fund 3-6 months' worth of expenses. I think it should be 9-12 months just to be safe.
The benefit of having some savings is to make sure you have cash available for emergencies. To make saving an emergency fund more digestible, you can start with a goal of $1,000 and keep building from there. Here are some tips that can help kickstart or grow your savings
- How I Saved The Down Payment For My First House
- 5 Ways Homeowners Can Save Money
- 5 Ways To Save Money On Groceries
- Saving Money With A No Spend Challenge
- 15+ Ways You Can Save Money This Year
8. Invest
From an early age, my parents had me and my siblings investing. We had retirement funds started before we were old enough to work. I didn’t make many if any contributions to my investment fund until after I graduated college, had a decent amount of savings, and had a steady income.Once you can work it into your budget, start investing in a retirement fund. You can do this on your own or use a financial advisor like I do.
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