I get it; Matthew, youíre 16 and, Nina, youíre 14 going on 29, which, by default, means you both already know everything about anything. But as time passes by, youíll begin to realize that the older you get, the smarter†I†get.
Funny, yes, but itís true; I swear.
Keep that in mind because, as a responsible parent, I feel it is my sacred duty to at least†tryand pass along to you a little fatherly financial foresight.
This time, your dear old Dad is going to share a few pearls of wisdom that will help you save a lot of money when youíre finally ready to start setting out on your own.
Now get your pencils ready, kids, because here we go:
Learn how to cook.†Cooking is a basic life skill that everyone should learn. Thatís because when youíre just starting out on a tight budget,†cooking at home†is the perfect recipe for saving money. And, Matthew, keep this in mind: Itís a proven fact that 99.42756% of all females†love†men who can whip up dinner without the aid of a microwave oven.
Start saving for retirement now.†As a teenager, I earned roughly $25,000†working in a grocery store over several years; thatís equivalent to almost $60,000 today. Unfortunately, because I figured old age was an eternity away, I didnít put a single cent of that money toward†my retirement nest egg. If I had invested just $2500 in 1983, that relatively tiny contribution would be worth more than $27,000 today, assuming an annual return of 8%.
Buy a first car thatís dependable, not flashy.†When I was 16 your Uncle Kevin was kind enough to give me an old sedan he no longer needed. But even though it was free, it still cost me a bundle in insurance, and operation & maintenance costs. If you truly want to minimize the financial impacts of owning a vehicle, make sure†your first car†is fuel-efficient, dependable, and at least a few years old. Save the flashy stuff for later.
Learn how to use a spreadsheet.†A computer spreadsheet is arguably one of the greatest tools ever invented.†Ever since weíve been married, your mom and I have been using one to†efficiently track our spending habits†down to the last penny. If you kids intend to keep a budget ó and you should ó remember this: A spreadsheet will not only help you effectively manage your finances, it will also greatly simplify your life and save you lots of time in the process.
Live at home for as long as possible.†I know itís not good for your social life, but living with Mom and Dad after graduating from high school will save you lots of money in rent, utilities, food and other living expenses that you can use to help cover college, or business start-up expenses ó and even give you a head start on your retirement savings. Youíre welcome.
Know what you want to do in life†before†you go to college.†College is so much more expensive today than when I went to school. If you expect me to help defray some of your expenses, figure out what you want to do†before†committing yourself to an expensive university. Otherwise, you risk earning a†worthless college degree†thatís guaranteed to result in a poor return on your investment. By the way, thereís no need to rush; you can always attend a community college until you get things figured out.
Donít rush into marriage.†Divorce can be an extremely expensive proposition, which is one reason why choosing who to marry is one of the biggest decisions youíll make in life. So take your time; studies show that†divorce rates†are higher for people who marry at a younger age. And, Nina, donít fall for the romantic notion that everyone has a one-and-only perfect soul mate; itís not true. There really are plenty of fish in the sea.
Before you buy a house, rent.†Home ownership comes with big risks and responsibilities, which is why itís not for everyone. There are lots of financial and personal factors involved in choosing whether to ultimately†buy or rent. If you arenít living at home, rent for awhile so you can carefully consider whatís best for you before finally committing.
Hold off awhile before having kids.†Iíll keep this short and sweet. Although theyíre worth every penny,†children are notoriously expensive, so spend a year or two enjoying life with your spouse before you decide to start a family. Besides, kids, Iím really in no hurry to be a grandpa. At least not yet.
Photo Credit: Marcin Wichary
(This is an updated version of an article originally posted on September 19, 2011.)