What’s the Best Financial Advice You’ve Ever Received?
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I just got tagged by FFB from Free From Broke regarding a new topic of conversation floating around. Help me keep the conversation going…
What’s the best financial advice you’ve ever received?
That’s a tough one. I guess I’d have to say, “making savings automatic.“ That’s been a big one for me. I’m a disciplined guy to some degree, but in my early to mid 20s I wasn’t saving enough. For the most part I took what was left over at the end of the year and threw it towards a traditional IRA. I guess that’s better than nothing though. Still, I wasn’t contributing to a 401K, and I wasn’t building up a decent emergency fund.
The problem was that I was trying to rely too much on my on discipline to spend less, then take the leftovers and dump it into savings.
Sometime in my late 20s I started catching on to the idea of automating my savings contributions by direct depositing a percentage of my check into a separate account before I had a chance to spend it.
Who can I credit for kick-starting me on the road to automated savings? My Dad sure did tell me a lot about paying yourself first and dollar-cost averaging back in the day: two concepts that automation builds upon. David Bach’s Automatic Millionaire also really took the concept to the next level for me, I think.
Since that time, my savings, both short and long-term has really taken off. I now contribute automatically to a 401K, a savings account for my property taxes, and, as of yesterday, a separate savings account for our baby we’re expecting in March. My goals are being met by making savings automatic.
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So, what’s the best financial advice you’ve ever received?
7 Responses to “What’s the Best Financial Advice You’ve Ever Received?”
By Sheila on Oct 10, 2008 | Reply
Spend less than you make. I’m not being flip, and I think so many people miss this first step.
By FFB on Oct 10, 2008 | Reply
Automatic savings is a good one! That’s helped me to sock away money. Before I automated savings I would always tell myself I would put money away but by the end of the month it would be gone. It got spent! By automating I made sure that I was always saving.
By Budgets are Sexy. on Oct 10, 2008 | Reply
Invest whatever your employer matches into your 401(k)! that was my dad’s #1 rule, and while i didn’t like it at first, i’ve been ALL over it
good post.
By Tim on Oct 10, 2008 | Reply
I know this is a simple one, but the first (and best) financial advice I got from my mom (who got it from her parents) was “Never spend money you don’t have.” That’s stuck with me and although I use a credit card, I never use more than I know I have in the bank that I can pay off.
By Mrs. PT on Oct 12, 2008 | Reply
When I was in college, an older co-worker told me to decide how much I can save and then just forget about that money and don’t touch.
I guess in a round about way this is kind of like automated savings.
By chai on Oct 21, 2008 | Reply
for me the effective financial advice is “don’t but things when not needed” and buy it when you have extra money..
effective financial advisor