I’m really not trying to brag. But hey, I write about money. What better way to learn about the do’s and don’ts than to hear the specifics that people like me have done well? Don’t worry, I’ll have moments of money remorse that you can learn from as well, but here are the top five most beneficial money moves I have made so far at the ripe old age of 29.
1. Investing early – Contributing to a retirement account early and often is the BEST way to get started on the “I don’t want to work until I die” track. I have made it a priority to put 12% of my income since age 22 into mutual fund accounts that are helping to make sure I get there. Choosing low cost companies so that your money is really working for you as opposed to paying some guy in an overpriced suit’s bloated salary is key. There might be some of you saying, 12%? That’s all? I know there are some folks that definitely contribute more than that in order to meet their retirement goals more quickly. BUT, I prefer diversification, which is why I have also made a diligent effort to save for…
2. Buying a rental property – My wife and I bought our second property in November of last year. We then rented out the home we had been living in. Don’t let anyone fool you, rental properties take work. They do, however, reap substantial rewards. I have an upcoming post dishing all the ins and outs of rental properties for those of you who are interested, but for now, suffice it to say that I am making hundreds of dollars every month with just a few hours of work. The reason that I only invest 12% of my income in retirement accounts is to save up to purchase more properties (I’m looking at another now). I truly think this is one of the best investments you can make over time, especially now, although it certainly isn’t the easiest.
3. Giving money away – Money isn’t everything. It honestly isn’t even most things. Money can grant freedom from work or want but it can’t satisfy your heart. Giving your money away is one of the best things you can do for your attitude and the way you think about your assets. You’ll never miss what you give away and doing so will actually help you better appreciate what you do have. So make a commitment to find great places to give away out of your excess.
4. Never having a car payment – I don’t think I can pick any one thing out of these five as being the most important, but if I had to, it would be this. I honestly wouldn’t have a rental home and I wouldn’t have been able to invest at the level I have thus far if it weren’t for my staunch belief in not having a car payment and not allocating precious few monetary resources towards a vehicle. There was one point about five years ago that I strongly considered buying a new car. It would have totally changed my financial future. If I had taken the new car at a dealership route I would be making my last payment right about now. Wow. Refraining from that purchase has allowed me to save thousands and thousands of dollars in payments, interest, and taxes over the last 5 years. My beater car has changed the ballgame for me.
5. Not accruing massive student loan debt – This one I stumbled into through blind luck. I wasn’t thinking about student loans and how they would impact my monetary future at 18. I don’t think there was much going through my head at that time besides girls and sports. That lack of consciousness about personal finance is part of the reason I strongly believe that schools should make personal finance classes a more important focus. In my college tips article I gave an example of a friend who has a student loan payment equivalent to a monthly luxury car note. How debilitating! My student loan bill is $70 a month. I’m really fortunate for that. College is awesome and important for your future, but don’t mortgage that future through astronomical amounts of school debt. There are some great educational institutions out there that won’t jeopardize your future through outrageous tuition costs.
I hope my top 5 financial moves list has been of some help to you. It takes some sacrifice and planning, but you too can be well on your road to financial freedom with just a few important moves in the right direction. So get going!
What are some of the most important factors that have led to financial security in your life?