On Sunday, I celebrated my 56th birthday. Living for over half a century is a wild thing to ponder, and ponder I did. Thinking about what makes a happy life consumed a good part of my day, eating Lobster filled the rest.
Money can’t buy happiness, but it doesn’t hurt. Health, wealth, and peace of mind play significant parts in not looking back in regret on what could’ve been. Age is no guarantee of wisdom.
I’ve made my share of mistakes along the way and learned from most of them. Here are some of the things I got right. I hope this list helps you or, more importantly, those who are closer to the beginning of their journey rather than the end.
- Money Buys Freedom Not Stuff: Right now, I work because I want to. That makes all the difference. There is nothing better than being in control of your day and those with who you interact. The earlier you understand this, the better.
- Live Below Your Means: Just because you can afford to buy something doesn’t mean you should. Keeping up with the Jones’s is a game that’s impossible to win. There will always be someone that has more. Coming to terms with this is the ultimate in stress relief.
- Marry Well and Don’t Hassle Your Kids: If you don’t do this, nothing else matters.You’ll be miserable 99% of the time, no matter how much money you have. Divorce is one of the biggest wealth destroyers on the planet. As far as kids go, they hate lectures and nagging. Pick your battles, and your chances of emerging victorious will skyrocket. Constantly pressuring your kids to be something they’re not is a fatal error.
- Invest Early and Often: Time is the fuel for compounding. It doesn’t take a genius to become a millionaire. Investing in a broad index fund over 50 years will be kind to you even if you’re an imbecile.
- Keep Acquiring Skills and Certifications: The more you’re qualified to do, the more you get paid. Skills are the fuel of super-savers. High salaries, not clipping coupons, will get you where you want to go. Big things matter – A lot.
- Replace Alcohol and Junk Food with Exercise and Nature: This should be number one on the list. Without your mental and physical health, you have nothing despite what your bank account might say. Get outside more and start an exercise program that works best for you. These are the two most important asset classes despite what the pundits say.
- Diversify Your Income Streams: Not putting all your eggs in one basket is a good strategy for most things. Relying on the kindness of strangers with a weekly paycheck is a much more significant risk than you think. Rental properties or a side business are two excellent ways to diversify and protect yourself from disaster.
- Be Greedy When Others Are Fearful: Its not easy to make money in the markets or everybody would be rich. Wealth’s born in bear, not bull markets. It’s not fun, but makes all the difference when all is said and done.
- Pay Yourself First: Create a reverse budget. Set up auto-contributions to various savings and investment accounts and spend the rest. Doing this guarantees the most critical person receives a big part of your paycheck – You. Taking away the guilt, this lets you avoid micromanaging your money. People can’t stick to complex budgets, but they can follow this simple rule.
- Do Good: Karma works. When you help people, they tend to help you back. Do the right thing, and good things tend to happen. It just might take a little longer than you expect.
The last part stuck with me. In the previous 25 years or so, I think I’ve helped thousands of kids through 20 years of teaching and thousands of investors through our 403(b) crusade and other endeavors. In the end, this did more for me than it did for them. Keeping me on the straight and narrow and focused on what’s important.
If it all stopped here, I’d say I had a pretty good life.
Filling the rest of my remaining days helping people reach their goals is an extraordinary privilege.
I hope this post was a start.