Whenever folks are asked what they’d wished they’d known about money sooner, most people (particular those approaching retirement) say:
- Saving and the power of compounding,
- Lifestyle inflation and the debt slavery that it can lead to, and
- How to save on the big and small things in life.
So much regret. If only…
We spend years ignoring the most basic rules of money and then, if by chance we convert to money maniacs, we spend years trying to make up for what we’ve missed by becoming rampant “frugalistas.” Or we come to believe that nothing can ever be different and that we might as well just blow it all now and have a great time.
Don’t want to end up old and full of regret? Then you best get in touch with Future You and ask them to intercede with Now You, explaining just how important it is to save and reduce debt. In a society where credit is as common as air, convincing Now You to NOT use credit can be a hard sell. But there are few worse outcomes than to be old AND poor, so Future You better get busy!
Stop right now and spend some time thinking of yourself as living your future life. Imagine you are 70 years old. (If you’re in your 20s or 30s, you could live to be 90 or 100.) Where do you live? What do you do for fun? How are you planning to pay for it all?
The point is this: DO NOT short-change the next chapters of your life just because it is so easy to let the here and now grab your attention… and your money. If you take the time to think about what you want your future to look like — to actually imagine yourself there — you may find it easier to be kind to Future You by making sure you have enough of what you’ll need (health, financial resources, friends) to have a happy life all the way through to the end.
There are some very basic rules to follow to keep Future You out of too-hot water:
- Save something: It doesn’t matter how little you start with, saving is a habit worth cultivating. Save $10 a month, then save $10 a week.
- Say “no” to consumer debt; every dollar Now You takes on in debt is going to steal a dollar from Future You, plus interest. Ugh! That’s no way to treat yourself.
- Mitigate your risks with insurance and a big fat emergency fund. The risks we seem to deal with quite easily are property insurance, car insurance, contents insurance. The risks we tend to overlook are those associated with our economic earning power. If you or your mate were to die or become ill or disabled and unable to work, would your family have the resources to meet their day-to-day needs? It’s a tough question to face, but the consequences of not facing it can be even tougher on your family.
Future You has to decide what you want; what are the most important goals over the long haul. Then Now You can decide which are the most important goals to work towards at each point in time since you likely can’t have it all at once. You’ll probably have several issues competing for your limited financial resources. Do you want to accumulate a specific amount of money, eliminate your mortgage or pay off that new car? Weighing each of your goals against the others will help you to see which ones to tackle first.
Finally, you’ll have to work the plan to make your desires a reality. And all the while you have to PAY ATTENTION to your money. That means making a real (numbers not pulled out of the air) budget. It also means tracking your actual spending against your budget to see how you’re using your money.
Whatever it is you’re trying to do, breaking it down into the smallest possible steps and then take one step at a time. Feel secure on that step. Know where you are. Then take the next step. Future You will be very happy that you did.