Looking back on my childhood, the foundations of my financial future were being laid even as I lived the halcyon existence of youth, marked by riding bikes, building forts, and pushing to stay outside as long as I could while my mom called us in for dinner. Of course, at those young ages, it was largely subconscious in nature, but the lessons and values I absorbed set me on a path and still resonate loudly, guiding my decisions today.
I believe the source of these strategies and standards must be credited to my parents. How much we are nature and how much nurture can be deliberated ad nauseam, but I strongly believe my mom and dad are some of the biggest influencers in my life. Even to this day, I will consult with my parents about big decisions, especially those that are financial in nature.
These are some of the most important cornerstones of my investing and money managing strategy, and ideas that I think can help guide anyone to a successful financial life, no matter what job, income level, or retirement goal they may have.
1. Surround yourself with high achievers that are experts in their field. For most of us, our job is not to study derivatives, stock markets, and economics, so find someone who does and enlist some help. It’s okay to be humble and allow help from others. My dad was a building contractor, skilled in home construction, but that didn’t mean he did the electrical or plumbing on every house. Do your homework, but listen to expert advice too.
2. Limit your debt load. One lesson my parents consistently reinforced to me was to limit my debt to “good debt,” like a home mortgage with a reasonable rate, and to avoid having multiple payments that included lots of interest. This goes hand in hand with not spending what you don’t have. Being heavily leveraged means you are wide open to financial ruin if and when major economic changes happen, and it adds a major level of stress which I’d rather live without.
3. Save no matter what. Even if it’s only a very small amount, commit yourself to saving every month. The more you put away earlier in your life, the longer it has to multiply, and compound growth is your best friend in investing. Be patient and consistent with your contributions.
4. Aim for diversification, both within your market portfolio and outside it. My parents own a small business, have a couple rental properties, and a diversified investment portfolio, so even if one area takes a hit, another can carry them through. I am still fairly young, but I have goals to diversify with rental properties and continually rebalance my portfolio to optimize my returns.
5. Enjoy the process. Although the general objective is to make money, there is a balance between the value of money and the value of your happiness. They can be symbiotic, but pushing too hard on either end of the spectrum can be dangerous and unfulfilling. Each person has different goals, but outline yours clearly, and then try to see the process as an enjoyable one, full of learning along the way.
I feel very fortunate to have great parents and role models around me, and know there are many people in less ideal circumstances, but it’s never too late to save and take control of your financial future.