I was asked a question the other day that
really got me thinking, really got my wheels
spinning up here. A client asked me, “Jeff,
what is the best financial advice that you
have ever received in your lifetime?” I really
had to take a moment and really think about,
of all the information I have got, of all
the tips, of all the advice I have gotten
over the years, what is the best advice? I
honestly couldn’t answer that question immediately.
I thought I had a few ideas, but I really
wanted to take a breath and just really see
what is some of the best advice I ever got.
The one thing, if this is your first time
ever hearing me talk or if you haven’t been
to the blog yet to know a little bit about
my back story, my family, my father, my mother,
they didn’t really give me a lot of good financial
advice. They always said maybe you should
save, but they never really showed me how
or never really introduced me to a lot of
cool tools like the Roth IRA that I could
save into. The best financial advice I have
received has been through my clients, through
the experiences that they have gone through,
the trials and tribulations of their financial
rights and wrongs. What they passed down to
me is where that advice has come from. I can
think of a few different things as some of
the best financial advice I ever got or ever
received.
The first thing is you should start saving
earlier. Duh, right! I know that’s not rocket
science. It’s not some great revelation. I
have met with so many different folks that
were in their late 50s maybe early 60s that
were approaching retirement and weren’t as
comfortable or confident as they would like
to have been. Had they started saving earlier
they felt that they would be much more comfortable
going into retirement with a really good strong
feeling about it, and they didn’t have it.
They wished they would have started earlier.
What such tremendous advice for, at the time
in my mid-to-younger 20s to get that, because
if my parents were telling me you need to
save early, you need to start, you need to
start, which they didn’t but even if they
had I don’t know if I really would’ve listened.
Now being in my 20s and starting my career
and sitting across the table from folks that
didn’t listen to the advice maybe that their
parents had passed down to them and now they
are paying the consequences. That was very
helpful.
To go along with that as far as starting earlier,
the other thing that they taught me or some
of the other advice that I got was you need
to save more. Once again, this isn’t some
epiphany like, “Oh wow! Thanks Jeff. That
really helped out a lot.” It helped a lot
hearing it coming out of their mouth saying,
“Jeff, trust me. Here we are. You see our
situation. You see where we are at. You see
where we are lacking and the money that we
wish would have. The reason that we are lacking
is because we didn’t start early, and we didn’t
save enough.” I will take another step to
that as far a saving enough. I think the other
aspect is trying to earn more. It’s always
about saving, but it’s also trying to earn
more. That’s you getting raises at your job.
That’s maybe doing freelance work. That’s
working a part-time job maybe from home. Maybe
it’s a side passion of yours to basically
try to earn more income. That’s something
that I have kind of adopted. I do save. I
did start early. I do save often, but I have
also tried to find other ways to increase
my income. I think there is a delicate balance.
Saving is a good thing, but if you can make
more it makes it that much easier to save.
Correct? That could be choosing a different
career path. If that’s not in your blood then
maybe it’s doing a side job. I have a lot
of clients that will do maybe freelance writing
or photography or anything for that matter
just to basically have some extra income as
well. Those are two of the things that I have
gotten and I would consider some of the best
financial advice I have ever got.
The third and final thing, which actually
if you go to my other blog, soldieroffinance.com
I actually wrote an article about it. I talk
about the “Lu”, which is the 1998 Chevy Lumina
that I drove whenever I was in college then
also drove for my first several years of working.
This was a car that was passed down from my
now-deceased grandmother. It was champagne
colored, had the alloy wheels, four door,
no spoiler, and had the cassette player. This
thing was sharp right? You can imagine driving
around town in a four-door Lumina. A few things
about it though: It had about 12,000 miles
on it and I think I got it from her back in
2002, maybe earlier, I believe. It was a car
that was four years old, maybe a little bit
older than that actually, and it only had
12,000 miles on it. So that was one aspect
of it. The other aspect of it: It was paid
off so I had no car payment. Whenever I was
in college, I talk about in this blog post
how my Chevy Lumina has…
The final piece of information that I got
that I would consider some of the best financial
advice I ever got was from my finance professor
back whenever I was a junior in college. The
professor on the first day of class asked
us, “How many of you plan on trading in your
car every 3-5 years?” I want to say all of
us, maybe with the exception of two and you
have a class of 30 folks or so, all of us
raised our hand. I remember at the time I
had this big vision of driving a BMW. I am
not sure why that was, but I just envisioned
myself driving a BMW. Once I graduated that
was my car, four-door sports sedan; that’s
what I wanted. I knew once I graduated, I
didn’t care how much I was going to make,
I was going to find a way to get that BMW.
When he asked us that question, we all raised
our hand and he responded by, “While all of
you are trading in your car every 3-5 years,
I’ll be taking my family overseas to European
vacations.” When he said that I thought, “What
does that mean? What are you talking about?”
So that was our introduction to the power
of compounding interest and how saving an
amount of money today and what it can grow
to be. It showed by putting in a car payment
per month, whether it be $300, $400, $500,
$600 a month, what that can grow to be. For
me as a young male who had these big aspirations
of driving this sport luxury foreign car I
was like, “Wow! What am I doing? What am I
thinking? I’m going to be wasting money when
I could actually be saving?” That was extremely
helpful to me and some of the best I ever
got because whenever I inherited that Lumina,
I had the option of trading it in or selling
it, getting the cash and applying it towards
the BMW. I still would have had a car payment,
but I would have been driving my dream car.
Instead I drove the Lumina for almost three
or four years up until I returned back from
Iraq, and I didn’t have a car payment that
whole time. Not having that car payment gave
me the ability to be able to save into my
401K, into my Roth IRA. It made me appreciate
the fact of how to spread a dollar, not go
out and waste money on just useless things.
That was a huge pivotal point in my life because
now I reflect back. Because I didn’t have
that car payment for those years I’ve got
a decent amount socked away in my retirement
accounts that has been able to grow over the
last few years. That has been, like I said,
just great financial advice. I am glad that
I received it. I’m glad that I applied it,
and any chance I get to share that story with
others as I’m doing now I look forward to
it and hope that you get something out of
it as well.
Those are three of some of the best financial
advices I have got over the years. I hope
that was helpful. If you want more information,
Good Financial Cents is where you’ll find
me. I have, as you know tons of information
there. If you have any more questions please
feel free to drop me a line. I look forward
to hearing from you. We’ll talk to you all
soon.
The opinions voiced in this material are for
general information only and are not intended
to provide specific advice or recommendations
for any individual. To determine which investment(s)
may be appropriate for you, consult your financial
advisor prior to investing.