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Financial Stuff I Want My Kids to Know Before They Leave Home
By JLP | March 11, 2010
1. Money’s not everything but it is important. A life WITH money is certainly easier than a life without money.
2. Money won’t bring you happiness but it will pay the bills.
3. The simpler your life, the better.
4. Save AS MUCH AS YOU CAN while you’re young. One thing you can never get back is TIME.
5. Choose a vocation you love but make sure you’re willing to live within the budget constraints of that vocation. A teacher isn’t going to be able to have a big fancy house and a fancy car but can still have a comfortable life if they live within a budget.
6. Live within your means (goes along with #5).
7. Stay away from credit card debt. You have been warned.
8. Not having credit card debt will put you in the minority but will open up all kinds of doors for you financially.
9. Understand what a mortgage amortization looks like.
10. Understand the time value of money.
11. Understand the math behind loan calculations.
12. Understand how your credit score is calculated.
13. How to evaluate a student loan and understand the long term implications of the loan.
14. How to create a household budget.
15. Understand asset allocation.
16. How to practice financial PATIENCE! Things will come. Just give it time. You’ll enjoy things much more when you can actually afford them.
17. Don’t buy a new car right out of college. Give yourself some time to adjust first. Don’t rush into anything.
18. Take a money management class with your future spouse before you get married.
19. Understand how income taxes are calculated.
20. Buy nice clothes when they are on sale but don’t use credit cards to pay for them.
21. Buy good insurance but don’t get suckered into something you don’t need.
22. Have enough cash available to be able to raise the deductibles on all your insurance. This will save you a lot of money on insurance premiums.
23. Don’t gamble.
24. When you get a job, do the best job you can regardless of what job you are doing.
25. Leave a job on good terms. NEVER burn bridges.
26. Read lots of books (including the Bible) on personal finance, career, and self-improvement.
27. Help people.
28. Give of your time and money.
29. Max out your company’s 401(k). You’ll get used to living on less.
30. Be thankful for what you have because there always people who have less than you do.
Topics: Kids and Money | 16 Comments »
March 11th, 2010 at 12:19 pm
My simplified version:
Understand the exponential function.
The same powerful forces of compound interest that help you save for retirement are also the ones that will work just as hard against you if you carry debt.
The difference between an 6% rate of return versus a 12% rate is huge! It’s not just double like many people think; $10,000 dollars invested over 40 years will give you $109,500 at 6% or $1,186,000 at 12%.
March 11th, 2010 at 12:19 pm
I’d add this one:
“If it sounds too good to be true, then it probably is”.
Great list, btw.
March 11th, 2010 at 12:23 pm
JT,
I should have been more specific with #10.
BG,
RIGHT ON with that one.
March 11th, 2010 at 1:21 pm
these are good advices, but can you condense them a little?
March 11th, 2010 at 1:21 pm
Paying with credit cards is not a big deal, if the kids know to pay off the credit card every month (avoiding “negative” interest, or interest that works against them).
1) It’s safer than using a debit card (using your PIN # at unknown locations and being unable to dispute charges).
2) You get rewards, albeit not amounting to very much.
3) More convenient than carrying around a lot of cash. This is possibly a downside if you like to shop
March 11th, 2010 at 1:52 pm
Great words of wisdom. If a person carries these lessons with them, they will be in a good position financially.
I lived by two rules when I knew nothing about finances:
1. Never spend more than you make.
2. Always save 10% of your gross pay.
This built a strong foundation for me even though I didn’t make much as a junior office in the Coast Guard.
March 11th, 2010 at 4:07 pm
(ATTENTION: This is the wise guy in me speaking. It is not the real me. The real me would say that the list was great.) Oh my. Your kids will be set free only knowing a thing or two about money and nothing about anything else …..
March 11th, 2010 at 4:13 pm
ctreit,
My readers hate it when I go deeper than personal finance…lol.
March 11th, 2010 at 4:21 pm
Great words of wisdom. I think it’s important to teach our kids about money from a young age so they are prepared for the future.
March 11th, 2010 at 5:28 pm
Outstanding words of wisdom. Lately I have been trying to show my 16 yr old son the ins and outs of finances. He says it is too complicated and hard to learn, but I am trying little by little.
I will print this up and go over it with him now. Awesome stuff.
2 things I preach to him is: 1. Save 10-15% and 2. Credit cards can get you in trouble.
March 11th, 2010 at 5:35 pm
MJM,
Thank you!
March 11th, 2010 at 8:50 pm
An informative post so helpful for parents. It ‘s so great ! I will send it to my friends. It ‘s will be helpful to them ! Thanks for sharing !
wedding stuff
March 11th, 2010 at 9:51 pm
Good advice. I like
“Stay away from credit card debt. You have been warned.”
March 11th, 2010 at 11:01 pm
These are some great points. If more people would just do these things we would all be better off. Maybe one day our government will learn to live by these principles because it breaks just about every one of them it possibly can.
March 14th, 2010 at 4:31 am
Good Advice:
except they may need credit to buy a home.
which is a good use of credit.
March 29th, 2010 at 6:31 am
I think that it is important not to have any contracts that can run away with you. A friend of mine had a cellphone contract on which her son ran up an extra $500 calling a girlfriend without her knowing about it until it was too late. I have gone over to a Net 10 prepaid phone which costs 10 c per minute and I can’t get any nasty suprizes, as it stops working when it runs out of money.