Money advice from dad

I spotted an article about money management for college students and it had some good ideas I’d like to pass along (plus some of my own).

Pay your Partner. With a capital P. The Lord. He’s got quite an investment in you and all he wants back is 10%.

Create a budget. The advice from Church leaders to “live within your means” assumes that you know how much you make and how much you are spending. A budget forces you to think about all the ways you spend money. If you have no idea where the money went last month or throughout the year, it is time to find out.

Surprises are for birthdays, not bank accounts. You need to know how much you have in the bank. Overdrafts are expensive and damaging to your credit history.

Think ahead. Part of the budget process is tracking the occasional expenses. It’s the tax bill, the house insurance, those quarterly payments that will get you if you don’t plan for them.

Learn to manage your credit cards. The name of the game is to avoid paying the banks interest. Now and then you’ll be forced to carry a balance. We had to replace the engine on our van several years ago. It took us a few months to pay off the repair. Other than that, we pay the balance BEFORE it is due. There is nothing worse than getting dinged for the interest just because your payment didn’t get to them in time.

Know why you carry a credit card. Think bona fide emergencies and building a credit history. It is too easy to overspend with a card because psychologically you don’t realize you are spending. You are teased into “having” rather than the concept that you must pay for the item.

Just say no. Practice frugal thinking. There are lots of nice things you could have, but your resources are limited. You must prioritize. You must get creative. Delayed gratification is good for the character. If something is really that important to you, someday you’ll have it.

Cook. Brown bag it. Your meals will be cheaper that way and healthier for you.

Talk. If there is something about your spouse and finances, you’d better get it off your chest. Pick a time when life isn’t coming at you full blast, then talk it out.

Save. The figure usually thrown around is 10%. Some of it needs to be liquid and some of it should go to retirement. Remember the bucks you bank for retirement now will have the greatest impact on your account balance at the end. Interest compounds best when it has a looooong time to do its magic.