7 Basic Tips for Financial Success
One of the best gifts you can give your children is an education on the basics of financial responsibility. When a friend emailed us the other day and asked us to write down some basic financial tips for her son, a graduating high school senior, we gladly complied a brief list.
After all, how many of us with a little gray hair look on in horror and consternation as young people spend money on items they simply cannot afford? And very few schools in our public education system, from junior high to high school, or even universities, seem to teach even the basics of financial planning, much less the keys to financial success, as part of their required curriculum.
I realize that we won’t be able to cure this problem with one blog post, but if you pass on some of these rules to your children and/or grandchildren, you may at least help them find financial success.
What Are Your Basic Tips for Financial Success?
My son, Jonathan, recently graduated from high school and I was wondering if you guys might be kind enough to write down a few basic tips for financial success, like a financial adviser, that will help him as he begins to navigate the real world?
Debbie, from Derwood, Maryland
Dear Debbie and Jonathan,
What a great question! Here are some financial tips we think will be useful:
1. Get and Keep a Job
Never quit one job until you have another, no matter how much you hate the current one. Quitting a job without a new one causes you to spend down your saving accounts. Furthermore, employers look more warily at an unemployed person than one who is currently proving they will show up to work every day.
2. Create a Savings Account
Build a reserve that is kept in a low-risk money market or savings account that holds four to six months of expenses. After all, you never know when you’ll have an emergency and if you don’t have cash to pay for it, you’ll have to pull out your credit card and begin a cycle of debt build-up.
3. Don't Overspend with Credit
Never borrow money to purchase a depreciating asset. We have found that many people with debt problems are buying furniture, TV’s, etc. on credit cards. This is a huge mistake. We know a millionaire who said he only bought used furniture until he had secured his first million dollars. By the way, cars are depreciating assets too.
So, if you only have $4,000 in the bank in addition to your six-month emergency cushion, you should be shopping for an old sedan, not a new convertible. For example, according to Kelly Blue Book, you could get a 2004 Ford Focus sedan for under $4,000.
4. Use your 401K
Always consider your ability to contribute to your 401(k) at least up to the company match. After all, a corporate match is free money! Take it!
5. Put Money Away Early
Put some money away early. Consider putting money into some sort of investment and give it time to grow. You may have the advantage of time on your side, which will really help you out if you want your money to gain interest. There are many different options available, consult a financial adviser if needed!
6. Get Disability Insurance
Consider your ability to buy disability insurance or make sure you have it at work. According to a 2019 study, 66.6% of all bankruptcies were tied to medical issues - both bills and time off work. So look for a policy that will pay your income if you get too sick to work.
7. Start Donating
Give time and money to causes bigger than yourself. Some call this tithing. Others call it creating good karma. We don’t care what you call it, but we do know it helps.
Maybe it’s because giving ties you into social networks that help your career as you help others. Maybe it’s because giving helps you realize how blessed you are, which creates a positive attitude (and we all know a positive attitude helps create success). But those are just guesses. We don’t know why it works, but it really does!
These suggestions aren’t rocket science, but we have found them truly helpful for many people trying to reach financial success and future retirement goals. We wish you the best of luck as you pursue your dreams, but feel free to give us a call if you ever have questions.
At Medallion Financial Group, we believe financial planning is about Family. We have been helping families invest in the future since 1987 through a holistic planning approach. We recognize there are a variety of needs when it comes to retirement planning, plan rollovers, annuities, college planning, life insurance options, and investment management. It is easy to get lost in a sea of choices. Our financial advisors help with the basics and beyond to enable our clients to get the education, advice and management they need to retire with confidence.
Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.
We strive to exceed client’s expectations – because we have high expectations of ourselves.