It occurs to me that we as a family spend more time talking about sex stuff than money stuff. Isn’t that weird?
I have spent a lot of time learning and re-learning about saving and investing. It’s never really a subject that you master because things change over time, not just personal goals or priorities, but the laws of finance shift too. Wait. That’s not true. There are some basic principles that don’t change, but the rules change.
No wonder we don’t want to talk about this. It’s a mess.
Let me give you a few pointers that will help you in any case!!
#1: Keep a clear idea of the relationship between time and money. Remember: the more you work, the less time you have to spend money. If you are still spending more money than you make, you can always get more jobs. That way you make more money and have less free time to shop.
You can also think of your money as representing your time. For example, a person who earns $100 each week should think twice about spending $5,200 on an annual vacation no matter how cool that vacation might be. (Unless they have time traveling as part of the vacation, in which case, cool! Go back to a time where you could retire on that $5200. Try to avoid the Civil War though, okay?).
I recommend thinking about about this money-time relationship (and little bit of math) when contemplating a purchase. Are those shoes worth three days of work? Is it worth shopping for three days to save $5? Will those shoes fall apart after three days, collapsing your reasoning into a black hole of broke-ass logic?
2: Don’t carry a lot of cash around outside of the house. If you want to make it rain in your room, like this guy…
I won’t complain, but don’t do that out in public, unless in addition to being a time traveler, you are also some kind of stealth gangsta (in which case, where’s my rent, huh?)
If you don’t have cash in your pocket, you can’t spend it impulsively, so you’ll automatically save more by not carrying it in a holster.
3: Have a savings account and use it. Set goals for your savings, starting with the worst case scenarios, adding best case scenarios and short term goals.
Find out what the worst car repair could be for your car and make that your car goal. Also think about maintaining your teeth, your health, and your pets. There are always some unexpected expenses, but having veterinary bills when you have a pet shouldn’t be truly “unexpected.”
This could be a little depressing, so don’t get too bogged down in the negative. Imagine the most ideal travel experience, or some thing else that you want to do and save for that too. Think up a really great gift for someone that you enjoy surprising and include that in your goals.
Once you have those figured out, pick a shorter-term treat that will take you just a little while to save for.
When you make progress, like an unexpected cash gift or a pay raise, slap most or all of it in your savings account. You may have thoughts of “I deserve to splurge.” Of course you deserve that, you deserve all sorts of wonderful things, but you also deserve to have savings that provide you with options and safety and a big fat cushion for your future self to fall on.
4: Learn about investing your money. These days there is so much information available to help you understand money and markets. You guys have it so much better than we did. When I went to the library as an independent young thing looking for something like “Stocks for Dummies” it didn’t exist, but I’m sure it does now. (Yup. Just google it!!)
You can probably find “Stock Tips FROM Dummies” in several languages, too. Just be careful about the sources you study when learning about money, whatever the medium. If you see a compelling theory in Virgil’s Sure-fire Swamp Investing Strategy, check the citations(1).
When you’re ready to move on to investing your money, be patient and experiment. If you find an interesting idea, try it out with imaginary money (in other words, don’t actually buy it, just pretend to buy it). If Virgil says that investing in Alligator Traps, Inc. is a great idea, make a note of what the current price is and jot down the prediction. Check back in a few months to see what really happened.
Rinse and repeat until you are comfortable with the concepts involved.
If you really don’t want to dig into money management on that level, there are plenty of people out there who can help. They are not free, however, and they need to be selected even more carefully than your dentist.
Take your time and give your money some time.
I’ll see you in Tortola!!