Is It Too Late? Money Lessons You Should of Learned in School but Didn’t

piggy bank graduate capFunny thing about Money Rules – you either learn them from teachers or learn them the hard way, by making mistakes. If you’d like to avoid the entire “Hard-Knocks University” program, put these financial lessons from the MoneyDiva to work.

Start Investing Early and Keep at It

So, you didn’t open an IRA or 401k when you got that first job? Better to start now than never! Yes, compounded interest and investment returns are what makes the average saver/investor wealthy (Einstein’s famous 8th wonder quote). And yes, time must pass but it’s going to pass anyways so, the sooner you start, the sooner you’ll enjoy some of compounding’s benefits.

There will be ups and downs whether you’re investing in equities, real property, collectables or (heaven forbid), bonds/debt instruments. So steal yourself, hold your nose and take the plunge. Thankfully, you’ll continue to learn and grow your investment skills throughout your lifetime. But the best way to learn is to have some “skin-in-the-game”.

Read some good books, find a mentor, expect to spend some time and energy learning to invest your money. The sooner you start, the sooner you’ll get good at it.

Set Some Financial Goals

You don’t have to know exactly what you want for the next 20 or 30 or 50 years but start making some plans for your future. You’ll want some short-term goals, say that $1,000 emergency fund and debt repayment; some long-term goals, i.e. retirement income and some in-between goals like, maybe buying your next car with cash instead of another loan.

For me, I wanted to provide my kids with certain things: their first car, a post-secondary education (no student debt) and help buying their first home. I set those goals when they were very little and, not surprisingly, I made them all happen at the appropriate time.

Track Your Income, Savings, Investments and Spending

Almost as important as having goals is watching what you’re doing with your money. There are several excellent, free tools available now to make tracking your progress so much easier than the paper spreadsheets and notebooks full of account statements I maintained, even though I started using online financial tools in the early 1980s! allows you to automatically import your spending and make more realistic budgets. also imports spending and income and helps you keep track of your investments. It allows you to keep track of multiple accounts, multiple brokerages and banks, all in one place with useful graphics and suggestions to improve your results.

You’re Going to Have to Make Some Difficult Money Choices

It’s a cliche but true: you can’t have it all, now. DO NOT fall for the trap of buying everything you want now, on credit, and struggling to pay it off over the rest of your life! No matter how many low-interest, low-payment loans you’re offered, you will regret mortgaging your future.

If wearing designer clothing is a top priority for you, then you may have to pair that with living in a really small space or having several roommates. And you’ll still need to set some limits – no new stuff goes in the closet until something older leaves (via consignment shop sale or a donation to charity) is a good one — really makes the value of another purse or pair of jeans clear.

Love your leisure time? Fine, so long as you enjoy the simple and inexpensive pursuits that a lower income can accommodate. It’s good to know though that some long hours and hard work early on (while investing the proceeds) can lead to a more relaxed lifestyle when your investments are earning income for you.

And, when you consider partnering up with someone, don’t overlook the financial aspects. I’m not suggesting you pull a credit report before the first date, but who you chose to share the most intimate aspects of your life with (plus have sex with) will have a big impact on your financial goals and lifestyle choices.

Money is a Poor Substitute for Real Friends and Self-Esteem

You can’t buy people’s affection (your own or others) with money, and those who try aren’t much fun hanging around with, long-term. Sure, you’ll always be able to find a date for dinner or a show when you’re picking up all the tabs but you’ll find out who your real friends are when you stop.

Rather than trying to paper over problems with gifts or loans, face the issues and make the hard decisions now – your future self will thank you!

No Matter What Your Priorities, You Must Spend Less Than You Make and “Pay Yourself First”

There are lots of ways to do this so there’s just no excuse for failing to follow this cardinal money rule once you know it. If your employer doesn’t offer deferred compensation plans (401k, 457, 403) start your own IRA. Setting up a transfer from each paycheck that’s deposited into an investment or savings account makes it a no-brainer.

Plus, as you track your spending, you’ll note areas you want to make changes to and be able to create an accurate spending plan (aka budget). Work your short, medium and long-range financial goals into the plan and those big scary goals suddenly start to seem attainable.

And, you’ll find that with the stress level of your life dialed down to a much healthier level it’s so much easier to enjoy today – because you know tomorrow is on track — to your exact specifications. As you get more comfortable working with, talking about and managing your finances, you’ll find every aspect of your life improves.

Live Long and Prosper, Leah, the

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