When I had my first child I knew nothing about
saving for her college education. My parents had not saved for my mine so I
couldn’t ask them about it. I knew that some of my friends had already set up college
funds for their kids, but I didn’t want to seem particularly nosey about
their money. I just needed advice. Whenever I would try to find out anything
specific about this topic, however, I would get a mysteriously vague,
Talking about money in polite company or any company is most often seen as not only impolite but downright rude. Nobody does it except in the broadest terms, citing articles about cryptocurrencies or IRA’s. But does that benefit anyone?
People share recipes, decorating ideas, car maintenance tips, even their politics and faith with other people. Yet when it comes to personal finance, most everyone keeps a tight lid on their saving and spending strategies.
I’m sure that there are many reasons. If you have more money than your friends you may not want to seem boastful. This may also open you up to being looked to for a loan. If you perceive yourself as having less than your friends, it may be uncomfortable admitting a weakness in your spending or saving abilities.
Chances are, your friends aren’t talking either. But money should not be mysterious. There are no magic tricks. Saving and investing doesn’t take special talent or skill. Because of the extreme cautions we take, this knowledge is pushed off to the side. There are no finance classes in high school. We must learn about these things from the far corners of Barnes & Nobles or Amazon.
When I was in my early 20’s, I was in a unique position of working at the Chicago Board Options Exchange. When it was slow, I would ask financial questions. “If you were just starting out, how much would you save?" Or, “What would you invest in if you were on a limited income?”
At the time, I was reading Money Magazine and The Wall Street journal. The answers I received from the guys on the trading flood weren’t very different from what I learned from those two publications.
So, since your friends aren’t talking, I’ll tell you everything I wish someone had told me. Of course, feel free to use absolutely NONE of this advice. I have personally used all of it and it has greatly benefited me. Choose wisely.
· When you are starting out, you must learn to live on a less than you earn. You should save aside 10 percent of your income each time you are paid no matter what. Begin saving in an interest earning savings account. As soon as you have the minimum amount saved for a money market account, transfer your savings there. You will earn more interest.
· Begin researching mutual funds. Decide which ones meet your moral and fiscal goals. Mutual funds are groups of stocks in a particular sector. The first mutual fund I invested in was Pax World which was a clean and green fund. They had a high rate of return and I felt good about what my money was being used to create. I used that fund to finance several cars for which I paid cash.
· As soon as you have the minimum amount the mutual fund requires you to invest, set up your fund to deduct a specific dollar amount every paycheck. For a number of years, I only had 50 dollars coming out of my paycheck every month. Over time, I would save 100 then 400 dollars per month. As your income increases, increase your savings.
· Save all of your money up front, directly from your paycheck or checking account so that you never miss it. This is the pain-free way to save. Plus, you have the security of a cushion. You never have any “emergencies” so you won’t feel burdened or restricted from this style of saving.
I finally was able to find a friend who was willing to talk to me about how they saved for their child’s college. She told me they opened up a pre-paid college fund through our state. Guess what? I opened one too and now my son’s four years of college are already paid for. If it wasn’t for my friend willing to be open, we may have never started the saving process.
What are your favorite tips for saving money? Don’t be shy, tell a friend. Money should not be a mysterious subject. You can stay away fro specific numbers. This type of thinking leaves most of us ignorant and I think more than ever we need to be sensible about saving. It leads to wealth, security, and the ability to help others. That’s all we really want.
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