Last night my husband Thom and I watched a television show called Billions. It followed a few previous nail-biting episodes where the main characters, Axe, Chuck, and his wife Wendy, stood on what appeared to be an inescapable precipice of disaster. Then, through an unexpected twist, they all managed to escape jail time and return to their former wealth and status with little or no repercussion. While we’d all like that kind of break in our own lives, especially when it comes to our finances, we usually aren’t as lucky. Even more interesting, at least to me, was that after triumphantly returning to his billion-dollar hedge-fund business, Axe looks at Wendy, his financial performance counselor, and says something like, “I thought the high would last longer than it did.” Don’t we all? When it comes down to it, many of the messages we think we know about money don’t pan out. And while I’m certainly no expert, here are a few truths about money that I wish I had known when I was young.
As I’ve mentioned before, Thom and I have been self-employed for our entire lives – except for those miserable 6-12 months where we both tried to fit into a business model built by someone else. We learned early on that we are “un-employable” so that required that we figure out ways to pay our bills, invest, and save on our own. Yes, in the beginning, we lived below the poverty level, failed at a couple of businesses and made more than a few of mistakes. But recognizing that nothing is a failure if you learn from it, we have acquired valuable feedback from each experience that allows us to now live mostly stress-free, healthy, happy and comfortable. However, I can’t recall that path ever being shared with me when I was young.
With that in mind, here are seven things that we learned along the way that I believe would have made the journey go much more smoothly:
- Recognize that wealth and success looks different to everyone—and don’t compare your level to others. When we are young most of us are taught—go to college and get a degree, get the best (meaning most highly-paid) job possible, stick with that job even if you hate it, buy a bunch of stuff that others envy, and hopefully, if you live that long, retire and finally do what you want. Instead, when I accepted that I wanted something different than most people right from the beginning, and was willing to make choices to support that lifestyle, I found my happy place. Sure, I know that if I worked harder I could make more money, have a bigger investment portfolio, and look more successful. But the tradeoff for that is something I’m not willing to do. Instead, I now know that I get to decide what success means to me and what part money will play. We all can. A big key is not comparing myself to others.
- Select your significant other wisely. A while ago I wrote a blog post about 1,200 people over 78 years old who, when interviewed, offered a list of things they wish they knew when they were young. At the top of the list was realizing how important it was to have the right spouse or partner in their lives. In other words, your significant other can either make you happy—or make you miserable. They can also make you wealthy in many ways, or make you a pauper. Don’t we all know women who spend fortunes on jewelry, product, shoes, etc.? Or men who have to have boats, the latest car, or the latest gadget? The trouble is, no one tells us that all that stuff costs money, time and life energy. And if we aren’t on the same page as the one we live with—it will drain us dry. If both of you agree that “looking good and having stuff” is far more important than having financial peace of mind or savings in the bank, then by all means partner up with that person. But trust me on this, if you don’t agree, then you will be miserable, and your finances will reflect it.
- Learn to appreciate the value of delayed gratification as soon as possible. Were you taught the value of putting off things today so you could benefit from something even better tomorrow? It wasn’t a specific lesson in my household but I learned it because if wanted something, I had to figure out a way to pay for it myself. Remember layaway plans? Of course, this was before credit cards allowed us all to buy whatever we want, as soon as we want it, and then face the consequences later. Unfortunately, when I first managed to get credit I had to address that learning curve as well. What I wish I had realized was that instant gratification never lives up to the hype. Like Axe in the TV show Billions, the high does not last and paying for that momentary thrill isn’t worth it in the long run.
- Find a mentor (s) who lives the life you want to live. As I’ve written before, Daniel Gilbert in his book Stumbling on Happiness explains that most of us don’t really have any true idea what will make us happy. When we are young most of us follow the suggestions of our parents, teachers, or what we see on tv—but those are only other people’s versions of happiness and success. Instead, Gilbert recommends that we find someone who is living the kind of life we think we want, and then ask them about it. Are they glad they made the choices they did? What did it really take to get there? Was it worth it? Would they do it again? If we can find someone who is living the life we think we might want, we can learn from them. A good mentor is someone who is modeling the life you think you want and is willing to help you get there. I sure wish I had learned that when I was young.
- When you find that mentor—listen and pay close attention to what they can teach you. As I’ve written before, Thom and I got involved in real estate investing when we were fairly young. We started flipping long before others even knew what that meant and we lived on the proceeds as we churned through the properties. At some point Thom vividly remembers a conversation with an older man who owned a dozen rentals free-and-clear in our neighborhood. When Thom asked him what he advised, he said something like, “Don’t sell them, pay off the mortgages, and you’ll never struggle for money again.” Oh, that we would have listened to that wise counsel back then!
- Do not accept that debt is normal or advisable. Back when most of us were kids credit was not as readily available. Still, in real estate we were told that a mortgage was inevitable and that debt was the way to build wealth. (Sort of like all those who are now saying college debt is unavoidable.) Sometimes yes, sometimes no. While I’ve known a few people who “worked the system” very well using “other people’s money,” I’ve also known quite a few who tried but lost everything. No one told us when we were young that being completely debt free was the best thing that we could do. But it is both possible and doable. Sure it takes self-discipline, effort and tradeoffs, but the freedom and peace of mind that comes from it is well worth it.
- Know your own finances. Lots of financial advisors teach that budgeting is a key to money success. We prefer to think of it as knowing your finances—what you have coming in, what’s going out, and what’s left over. Unfortunately, most people don’t seem to be that aware. If you ask someone what they pay to live in the house they live in—most will tell you a rental or mortgage amount, but they have no clue the total cost (taxes, utilities, insurance, maintenance, etc.). Or what about the price to drive that new car? If we don’t know the true and full cost of something, we are living in denial or fantasy. Eventually, however, those true costs will catch up to us. I really wish I’d learned early on that everything requires tradeoffs and that eventually we will be accountable for what we spend.
Bonus tip: Realize that your time and good health is more precious than money!
I’ve heard that more people would rather tell you about their sex lives than talk about their finances. But if I’ve learned anything through the years, it is essential to talk about money if we ever want to be free of the weight that comes from unconscious consumerism, out-of-control spending or crippling debt. Like I mentioned in a previous blog post where I shared tips from older people at the end of their life, every single one of them confessed that they wish they had been true to themselves rather than live the life that someone else planned for them. But let’s face it, is it possible to be true to yourself if you aren’t true about how money works or doesn’t work, in your life? Surely the SMART path is to remember that we each get to decide what wealth and success mean to us. And a good place to start is to honestly tell the truth to ourselves about what money means to us, and why, and then live accordingly.
Okay, your turn! What have you learned about money that you wish you could tell your younger self? Please share that and any other thoughts in the comments below.
Kathy – Of course I took your points and wondered about myself. I have always been a saver – I started saving for retirement at age 21 when I started working. Part of me wishes I hadn’t played gratification quite so much. But I know that right now we are financially comfortable, so not sure if we had spent more, I would be able to say that.
Hubby and I have very different spending habits and knew that immediately. Luckily, he let me manage the money and give him an allowance. He only spends the money he has! Still does. No credit card debt ever…he saves up and then spends. So it’s always been OK (except I then need to deal with his pack-rat stuff… a different issue.) the phrase that got to me was “all that stuff costs money, time and life energy”… but then I realized for him, the stuff brings him happiness. It really does.
I honestly do not know where I developed my savings outlook as neither sibling is like me. But I’ve always been very aware of where the money is – input and output! I do think that financial literacy needs to be taught in school. When I hear facts about debt and average savings for retirement (and then see the latest cars and electronic gadgets flying off shelves), it always shocks me.
Another thought provoking post!
Hi Pat! Wow! I know you are super organized (and I pale in comparison!) but I’m impressed that you had the foresight at 21 to start saving. Thom and I lived hand-to-mouth for quite a number of years. And good for you and your husband for finding a solution to your different approaches to money early on. That doesn’t happen with many couples that I’ve known. And who knows where you got it from? I am also the only sibling in my family with the same sort of approach to planning, finances and self-awareness in general. If you ever figure out how siblings can be so different even when raised in the same house, let me know okay. I would LOVE to read that post!!! ~~Kathy
I have been very aware of the value of money from an early age, and never particularly interested in having a lot of consumer stuff. I paid my own way through university (3 degrees) with almost no debt. Of course, this is Canada, so the cost of university or college is not so high for individuals as in the USA as we support higher education through our taxes. I remember when I first moved into a university residence in the big city, I was shopping for a bath towel in the bargain basement of a department store. It cost $12. I remember calculating how many hours of work at my minimum wage job it took to pay for the towel. “This towel will cost me four hours of my life,” I said to myself. This thought immediately squashed any desire to buy two towels, or a more expensive towel!
I certainly have made some financial mistakes, mostly associated with real estate purchases, but I have not wasted a lot of money on expensive stuff, and I
have lived within my means.
Jude
Hi Jude! Good for you for just innately knowing that money isn’t the key to happiness. And I LOVE how you just knew how to think about a purchase in terms of how many hours of work it would take just to pay for it. That’s a GREAT tip. And I doubt there is anyone of us that hasn’t made a financial mistake in the past…but again, the trick to me is to make sure you learn something and don’t repeat it! ~Kathy
I grew up poor. People who were rich were considered somehow very different from us. The good thing is that I learned to shop very wisely and be careful with money. The negative thing is that I inherited a mindset that money is out of our reach. We are comfortable now and live within our means. We also have the money to keep the lifestyle we want to keep. It is not extravagant, but we can buy the things that are meaningful to us- such as travel or time with family.
Hi Michele! It sounds to me like you learned some valuable lessons while you were young. But if you are able to live comfortably, within your means and do things that are meaningful to you, then it sounds to me like your mindset about money is just fine. Once we have our basics covered and can do some of the things that fill our life well, then I think we are doing very well. ~Kathy
Comparing yourself to others is something that seems to come natural to all of us, yet, it has no value at all, because we are all different people with different goals, priorities, and desires. It is easier said than done, though. We keep falling in that trap.
When I first met Americans and visited the States, I was surprised that people had taboos about money (and talking about it) and that they started their adult lives with so much debt. In that sense, I had it easy as a European. That, finding the right partner with the same ideologies and realizing that money is not that important, as long as you can live the life that you desire, make me happy about the lifestyle I chose. For us, however, we decide to spend less in order to be able to work less, or work jobs we like for a small paycheck.
Hi Liesbet! Thank you so much for sharing your personal experience with all of us. And yes I completely agree that you have decided to consciously make the choice to dial back the “job” issue and work less (and with more flexibility) as a tradeoff to making a lot more money. Like us, you could make more but you are well aware that comes at a high cost. Good for you for having the “European perspective” on money that doesn’t make you a slave to it! ~Kathy
Great suggestions Kathy and how our goals have changed over the years. Love your “Bonus tip: Realize that your time and good health is more precious than money!”
Hi Gary! Thank you. I know that much of this is “preaching to the choir” but I also think it is important to keep reminding each other. Let’s NEVER forget that our time and good health is far more precious than our bank account! ~Kathy
I have always been very careful about money… a trait I learned from my father. He didn’t like to buy things on credit (he’d save his money so he could pay cash for a new car rather than “waste” money taking out a loan… that sort of thing). Fortunately, my husband (“Select your significant other wisely”) is good with money too, so we were able to retire a bit earlier than most people and – other than unknown health care expenses – we feel pretty confident that we are in good shape. One important course that seems to be missing in most (pre-college) schools is financial literacy. So many young people aren’t taught the fundamentals and I think that’s a tragedy.
I liked “Know that wealth and success looks different to everyone” most of all. I guess that it’s hard not to feel a bit of envy now and then, but knowing what’s important TO YOU and being grateful for what you have is truly the key to contentment and happiness.
Hi Janis! Good for you and your husband for being on the same page as each other. I suppose some people might be able to find a solution to a major financial incompatibility, but it can’t be easy. I agree that it would be so helpful if schools taught financial literacy. And I would certainly like to believe that parents are teaching them too…although what’s the saying? You can’t teach what you don’t know and aren’t interested in? And while it’s nice to have a partner on the same side as you, I would also hope that singles find a “financial friend” so they can talk finances with each other. The conversation needs to happen much more IMHO so we lessen all the stignma and competition that it generates. But even then, as you say, it is impossible not to look around and sometimes hope you had/have what others have. But then I think it really helps to travel, like you just did, to places like Mexico and realize that we have SO MUCH MORE than others but that doesn’t lead to automatic happiness. Thanks for sharing your thoughts. ~Kathy
I did everything wrong. The only thing I did right was to have a strong work ethic. I got lucky a few times, mostly because a buddy would say to my unenlightened ass: hey, let’s go take this promotional test! (I went with her, passed, got transferred, and hit the career ladder that made me successful). Or, hey, let’s go check out this accelerated bachelor degree program (which allowed me to finally get my BA 18 yrs after finishing high school). I married badly the first and second times, but I got a beautiful son out of the first one and a great, if painful, education in human nature out of the second one.
Then incredible luck: a rich man wanted to be my third husband. We married, but unfortunately his family business soon began to undergo turmoil. With my been-poor, been-self-sufficient street sense, I saw the apocalypse coming and helped us prepare. Today we live comfortably in a blue-collar town within, some days, the aroma of dairyland. But we’re safe, for now, knock wood.
Hi Lynne! Au contraire! From my view, it seems like you’ve done a LOT of things right even if some of them were a bit messy. 🙂 Could or would it have been easier? Maybe. But Like you said you wouldn’t have your son or all the valuable wisdom that you now have. AND you likely wouldn’t be with your current husband. Living comfortably, safely and hopefully happily where you are is a very good thing. ~Kathy
“If wishes were horses, beggars would ride.” This old, and often quoted saying came to mind when I read this post, Kathy! I WISH I had the wisdom about money that I have now. I made many mistakes during my younger years, but fortunately was able to move past the constant ‘worry pit’ about money. I think the biggest lesson I learned is that worrying about money puts us in the ‘scarcity’ mode, rather than in an ‘abundance’ frame of mind!
Hi Diane! Hahahaha! Yes, I agree that wishing doesn’t fix it–but hey, as an optimist I can always dream huh? Of course, nearly everything we (and it looks like you) went through was necessary to get to where we are, right? And thank you for pointing out that ” I think the biggest lesson I learned is that worrying about money puts us in the ‘scarcity’ mode, rather than in an ‘abundance’ frame of mind!” I SO agree with that and do my best to counteract scarcity mentality whenever I can. ~Kathy
I am SO glad that I’ve always been careful with money Kathy. I married a man who has never thrived in the 9-5 world – he isn’t someone who worries about money – a bit of a fly by the seat of his pants-er. He always says how lucky he is to have me because we’d never have achieved the financial security we have today if it wasn’t for my savvy way with our funds. Neither of us have ever been big earners, but we’ve always been small spenders and the idea of accumulating mountains of “stuff” revolts me a little. Now I think we’re in our sweet spot – each earning a bit and enjoying the relief of no debts and avoiding comparing ourselves to those who have more than us – it just causes discontent and unnecessary envy. I love that you have found the same balance – life is good!
Hi Leanne! Good for you and your husband for finding something that works for you both. I’ve read that the #1 cause of divorce (or at least near the top) is disagreeing about finances. So even if you have different approaches to work, as long as you are on the same (or very similar) page as your spouse or significant other you can work it out. Isn’t it wonderful to have found your “sweet spot” regarding finances, spending and stuff. I would say that’s a good way to know you are rightsized! 🙂 ~Kathy
Kathy – Having been raised on welfare and spending the first 13 years of my adult life with a vow of poverty and rules that required me to ask permission for every penny, I have a strange relationship with money. I began managing my own affairs at age 30 and so was a bit more conscientious than many might be – but that did not save us from the 2007 recession and unemployment! Things happen and we make the best decisions we can with the knowledge and insight of the moment. I believe that the secrecy and shame around money and debt can lead to many other problems. I also think it is important to remember that our financial situation does not speak to our moral character.
I love the idea of finding a mentor — and listening to that mentor — and I’m happy that my children seem to be building a healthy relationship to the balance of spend/save/invest/donate!
Thanks for yet another thought-provoking post!
Hi Janet! Thank you for sharing your rather unusual past with us. I can see how your view of money would be skewed–and would take a while to sort out as you’ve aged. And yes, as you also point out the secrecy and shame around money and debt is almost as bad as the stress that comes from it. And it sounds to me like your children have YOU and your husband to mentor them. Isn’t that one of the best gifts you can give your child? ~Kathy
P.S. Sorry about your this post not showing up. My “aggressive” spam checker catches some people sometimes and not others. Ugh!!!
I am smiling. This is all good advice, but maybe I need to read between the lines. LOVE factors in. When John and I fell in love we were kids, 16, 17. We married at 23, 24. He was starting his first job, I was also. Planning? We believed in each other and everything worked out. I left teaching when I got pregnant, he was our sole breadwinner must of our lives. Once, he was unemployed and started his own business, but was eager to attach himself to a larger firm–which eventually he did. We feel blessed. But I’ll say one thing: health insurance is a big factor in economic success. We always had good health insurance. THANK GOD. John has a chronic form of leukemia, we wouldn’t be living the good life in CA now if he had not had health insurance. I tweet every day to these folks who don’t get what the current government is doing if they take away the ACA. People need health insurance. You can’t pay for good health from the salaries most people earn. And pre-existing conditions?? That includes high blood pressure. Many will get that. Is it a big deal? You bet it is. Try a stroke, a heart attack with no insurance. Money? Forget the yacht or the fancy vacation, American need a decent salary, learn how to save and have health insurance. Sorry, but I’m an RN and that’s my thing.
Hi Beth! I SO agree that health insurance is important. As self-employed impoverished people (seriously!) we didn’t have health insurance until we hit 40th. I think angels were watching over us because about 5 years later I had a major problem and I’m not sure if we hadn’t had insurance it would have devastated us. I am a HUGE fan of UNiversal health care or Medicare for all and will do what I can to make sure that happens. If you aren’t healthy and can’t afford to stay that way, health can derail ANY attempt to feel well provided for. Thanks for sharing some of your insights. ~Kathy
Hi, Kathy – I too wish that I could go back and share these money-truths with my younger self (or that she could have read and understood this blog post)! I also agree that nothing is a failure if you learn from it. I am delighted to be back to my Friday morning routine of reading, and reflecting, on your posts. Your words are always very wise, forgiving and encouraging!
Hi Donna! Thank you. Is it any wonder you were so missed? And I’ll bet there are dozens of other bloggers smiling happily too now that you are back. May we all continue to remind each other of the deeper truths of life as best we can. ~Kathy
Ah, Kathy – This is one of the many reasons why I love you so! Although I have only been back in the blogging world for 24 hours, WordPress and Jetpack still hate me. In my absence, my “Follow this Blog” widget mysteriously disappeared, and several regular subscribers to my blog were (also mysteriously) unsubscribed. The ‘technical-glitch’ side of blogging I definitely did not miss! Everything else I did.
OH NO! I’ll admit that the WordPress technicalities are constantly challenging me too. I don’t think anyone who isn’t blogging realizes that it takes just as much work managing all this as it does to write. As they say, you have to LOVE this or it just isn’t worth it. Good luck figuring out what happened in your absence. I definitely sympathize!!!! ~Kathy
🙂
Money is very seductive. We yearn to have it, and then we yearn to spend it … whether we have it or not.
I feel sorry for young people today because I think it’s even harder for them to avoid the FOMO than it was for us when we were young.
Your observations are very astute. With my financial background I was able to avoid many of the pitfalls others trip over – like little or no budgeting. It’s your first point however that rang the most for me. I wish I had learned that lesson much earlier than I did.
Hi Joanne! I so agree that it makes it difficult for us all to escape the FOMO aspects of money these days. It seems like (even if just in my mind) that everything today is so commercialized and marketed that it is difficult to avoid comparison — and thereby difficult to avoid FOMO. That’s why even though I think much of my writing is going out to people who know this stuff already (and certainly as much as I do) I keep finding it good to be reminded over and over again. Keeping my thoughts focused on what makes for a more peaceful, happier and stress-free life needs our constant focus these days. Thanks for checking in with your thoughts. ~Kathy
Excellent thoughts! Thanks for sharing.
Thanks Tim!
Hi Kathy,
I learned that the couple of years immediately after retirement are a dangerous time. I made very good money when I was working. I was so busy that I didn’t really think it meant much to me. But when I finished work, I spent as if I were still getting fat cheques in my mailbox every week. I spent on soothing – art, especially sculpture, and on other people. It was as if I was in a dream state where nothing mattered. Perhaps it happened because when I first retired I was afraid of dying. Perhaps it’s because in my burnout, I needed to surround myself with beauty.
Whatever the reason, I’ve just dug out of it now and am back to being debt free. I’ve woken up and don’t intend to go back to sleep again.
Thanks for your list. All good advice. I never had a mentor, but have been mentoring a young relative for the last few years. It does make a difference – to both parties.
Hi Karen! Oh good information! Thanks for sharing what you went through because I’ll bet you aren’t the only one! Because we’ve always been self-employed we have had to constantly learn to manage our resources through the years…I can’t imagine if or when we fully retire that will change too much. But for others who have worked at more normal jobs through the years, it could be much more seductive to just use all your free time to enjoy yourself! And how interesting that you admit that you spent money to “soothe” yourself because I think that is what many people do when they overspend. Good for you for recognizing that it had something to do with your fear of aging and eventual death. I doubt you are alone in that either! Glad you “woke up” and managed to clean it all up. ~Kathy
Like you said, I wish I had learned these money lessons when I was much younger. I was one of those live in the moment, got the money so I can spend it kind of girls. Good thing I changed later in life…but oh, if I’d only gotten smarter quicker.
Hi Jennifer. Thanks for sharing what most of us also went through as well. I suppose it is a symptom of youth to not worry too much about the future, and God knows I’m an optimist, but learning like Deb said that we can trust ourselves and that we can be extremely resilient no matter what happens is so important. When I look back on the mistakes that Thom and I made I am just so glad I learned those lessons when I did. Unfortunately, I still see quite a few people making them and hope they will pull through! ~Kathy
Hi Kathy,
Love this post. One thing I would like to tell my younger self would be to not worry about money quite so much. To believe more in myself and my ability to weather any financial storms. Having had to rebuild my life several times over now, I finally have that confidence but wish I’d known this decades earlier.
Deb
Hi Deb! Thanks. And I agree that not “worrying” so much about its importance would be VERY valuable to have known. Wouldn’t it be great if we all were taught to believe in ourselves and our resiliency instead? Good for you for having learned that along the way! ~Kathy