Managing finances is a very personal issue, and there is not a one-size-fits-all solution for everybody. Realizing that, I wanted to share 10 practical tips for how I have managed my finances over the years. If any of these work for you, great; if not, I hope that you will come up with your own solutions for making your finances work better for you.
- My daughters always wore the best clothing growing up, but not one item was purchased from a retail store. My wife is a master garage saler, and always found Guess jeans and Espirit clothing and other items for a fraction of the cost at garage sales. We have picked up all sorts of household items at a fraction of the cost at garage sales and thrift stores.
- I use credit cards for convenience and cash back; never for accumulating debt. In fact, I have only made one interest payment on a credit card in my entire life. Our washing machine broke down in New York, and I purchased a new one with my credit card. I couldn’t pay the full bill when I got it, but I paid it off the following month. Too many people sink their hard earned money into costly interest payments. I can’t think of too many things I am willing to buy on credit besides a house, car, education, and starting a business.
- I was fortunate to work for companies that provided employee stock purchase options. I have used company stock as a savings account, and sold stock whenever I needed to make a major purchase. This has enabled me to pay cash for my last three cars, vinyl siding for my house, my daughter’s esthetician school, my personal training school, and it is currently providing my retirement income through the end of the year while I prepare to transition to a new career. Speaking of cars, I generally keep them past 100K miles. My 2003 Ford Taurus has been exceptional. It currently has 148K miles, and I am hoping that it lasts to 200K without any major repairs.
- Spending comes down to priorities and choices about what is most important to you. For example, I don’t skimp on healthy food, supplements and quality athletic gear and apparel. One area we have skimped on is furniture. We have gotten by with used furniture most of our marriage. We didn’t buy our first new bedroom set until our 30th anniversary. Initially I was thinking about working a few more years in order to buy a second house in Florida. As I thought about it more, I realized that I really didn’t want or need to own a second house. For my purposes, renting a house for a week or two in the winter is all I need.
- I put the maximum amount into my retirement 401K and IRA accounts for the past 25 years. When I retired in May, I had reached my goal savings amount. My only mistake was that I should have started saving 20 years earlier and I would have had twice the amount saved. Since I probably won’t live till I’m 200, I guess I can live with this mistake. That is, at my planned rate of withdrawal, the money I have saved should last another 30+ years with some left over for my children. My wife and I don’t have a great interest in travelling during retirement, so this will help our retirement income last longer.
- Another mistake I made was buying and selling too many houses. I made minimum gains early on, but overall I lost a ton in real estate. If I had to do it all over again, I would have purchased one house, and stuck with it. I did atone for my mistakes when I purchased our house in Eden Prairie in 1993. I got a 30 year mortgage, but through making extra principle payments, I was able to pay off the mortgage in 10 years, and I have not had a mortgage payment since 2003.
- I also made the mistake of not finishing college directly out of high school. I attended a technical school in my 20’s to learn computer programming, but I had other interests and responsibilities, got married early and had children at a young age, so it wasn’t until my late 30’s that I finally had the time and interest to complete my B. A. degree. However, I was a motivated learner at this time in my life, and I went on to complete my M. A. degree three years later in 1995. I would not recommend delaying college to young people, but my approach did have one major financial advantage; my employer paid for all my bachelor’s and master’s courses which saved me tens of thousands of dollars.
- We have managed our spending in order to live within our means. We eat out, but not excessively. I prefer making my own healthy meals anyway. We have taken great vacations to Germany, Spain, Israel, India, The Caribbean, Mexico and I have been to all 50 states. My wife and I have taken two cruises, and we took our children to Disney World twice. At times, we have had to cut back, but I always took time off work to enjoy life. I like to take two out of town vacations a year. Sometimes it is not a matter of where you go and how much you spend to get there, but how you go in terms of your mindset, and who you are with. I am planning a special vacation for our 50th wedding anniversary in 2023.
- Just for the record, most of my income has come through work. We received a very minimum inheritance when my in-laws passed away in 1995. This was a nice financial bump that impacted us for about two years, but it certainly was not a game changer for us. Most of our family income has come from my earnings. I have been very fortunate to have had steady work for the past 40 years. My wife has worked part time on and off over the years as a cake decorator, clown, decorative painter and other assorted jobs. It has been my privilege to support her over the years as she has given her time to volunteer work, helping others, and caring for our daughters and granddaughter.
- I have always practiced tithing; that is giving 10% of my earnings to God’s work. This might seem counterintuitive, but working hard, yet ultimately trusting God with my finances has sure worked for me. God provides. Beyond tithing, the principle, “It is more blessed to give than to receive.” has definitely proven true in my life and has produced a “givers high” whenever I have practiced this behavior.
Here are 10 additional words of wisdom related to money from wiser minds than mine:
- I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too. –Steve Martin
- A nickel ain’t worth a dime anymore. –Yogi Berra
- You can only become truly accomplished at something you love. Don’t make money your goal. Instead, pursue the things you love doing, and then do them so well that people can’t take their eyes off you. –Maya Angelou
- Money is a terrible master but an excellent servant. –P.T. Barnum
- Money often costs too much. –Ralph Waldo Emerson
- Wealth is not his that has it, but his that enjoys it. –Benjamin Franklin
- Every financial worry you want to banish and financial dream you want to achieve comes from taking tiny steps today that put you on a path toward your goals. — Suze Orman
- Wealth is the ability to fully experience life. –Henry David Thoreau
- We make a living by what we get, but we make a life by what we give. –Winston Churchill
- If a person gets his attitude toward money straight, it will help straighten out almost every other area in his life. –Billy Graham