I grew up with this very midwestern America, lower-middle class teaching on money: be frugal, don’t waste money, save it for later in life.
That’s pretty good advice and I’m glad I have that as a foundation. But the most important thing you can do with your money is know what you want to spend it on. Otherwise all that stuff is meaningless.
This attitude makes you feel guilty about spending anything in excess. You get the feeling that you are always poor and don’t have enough money to spend on things. The goal just becomes amassing this huge sum of money for the end of your life, but there is no purpose for it.
The best piece of advice I can give you is decide ahead of time what you want to spend your money on. Big stuff. Life changing stuff. And then spend the money on that stuff.
Do it while you are very young, preferably with your spouse. Sit down and decide what you want to spend money on. Don’t wait until you are 60 to decide what to do with some big stash of cash you’ve been storing.
Mama and I thought these things when we were young and made a list. We came up with three things that we really wanted to spend money on. If we get to the end of our life and we’ve spent all of our money on these things and don’t have a dime left, then we will feel rich beyond our imagination.
- Adopt a child
- Give away an extra percentage of our income every year (up to 50%)
- Buy a property with our family that we can all enjoy for years to come
There are two others. One is giving you kids an education of some kind, but I’m hoping that something better than “college” as it exists right now will end up being a good option. The other is hosting a great party when you guys get married. That was one that India taught us. We don’t plan on skimping too much for that.
It feels good to set aside money specifically for these things, not just for some vague future. They are things we can be very proud of, and know that we will be happy how the money is spent.
You might have other things you want to save for. Starting a business, taking a trip around the world, investing in a dream. Whatever they are, set your financial goals early on, and take pride in achieving them.
Part of the brilliance of doing this early is that 1) You’ll like set more attainable goals as a young person and 2) You tend to be a little more idealistic and clear minded when you are young. Both those things will help you set yourself on a great path.
Don’t be dumb with your money. If you don’t have it, don’t spend it. Have some money stored away for an emergency. But don’t be dumb the other way and just save for savings sake.