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?
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Spend less than you make. I’m not being flip, and I think so many people miss this first step.
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.
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.
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.
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.
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
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