Dear Marco,
Happy birthday! I regret that covid took your celebration away. Then the rain took away your one request for a day of family soccer. But I don't regret seeing your resilience and lack of self pity. I will never forget your expressions of gratitude and joy during our last-minute scavenger hunt and the surprises that family left on our porch. I believe that your generation will be the greatest generation of our time, as you have learned to expect little and find joy and gratitude for what you do receive.
When it comes to money, low expectations will be your friend. There are many money traps along the way that I and many of my counterparts have fallen into. But there were also missed opportunities to find joy and purpose with money. Let me offer some of the lessons that I have learned, most of them the hard way.
• Save 10% of everything you make for your future. There is nothing more frightening than the prospect of being in old age with no resources. If you save 10% from the beginning, you will never miss it.
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• Consider saving more than 10%. Imagine during your working career realizing that you are going to work because you love it, not because you need the money.
• Your net worth is not your self-worth. If you find yourself compulsively pulling up account statements, then take that action as a gentle sign that you could use some inner work.
• Invest regularly and using passively managed index funds. I learned this through Beanie Babies, the 90s tech boom, the 2000s housing market. You will have your own versions of the Dutch tulip bubble. You will get stock tips and epic stock win stories from friends, dude bros in sports bleachers, and Big Fish. Remember that people only discuss the winners, rarely the losers. Stick to your strategy.
• Always keep an emergency fund of cash, and never dip into it for any other reason. It's a slippery slope if you do.
• Avoid credit card debt and car debt. There is nothing wrong with saving up for and buying your own car. Especially with a car, people tell you to use other people's money and invest the savings. Rarely do people get car loans and invest the savings. You will also buy more modestly from savings than from a car loan.
• Speaking of cars, drive your career in the fast lane, not your car. Nothing good comes from driving fast and aggressively. You have too much to lose and, trust me, speeding tickets are a dumb and useless expense.
• Save ahead for big expenses. Not only does this help you avoid credit card debt, but you will also enjoy those purchases more.
• Always pay your bills, and when you have the chance, put them on auto pay.
• Don't buy a house that is more than 2x your annual pay. If you want more house then put more cash in it. No one wants to have a nice house then find themselves broke all the time and unable to do anything fun.
• Buy insurance. Don't get sold insurance.
• A lot of people look really rich. Don't be fooled.
• You might find yourself wanting to look rich. That's a human instinct, and I won't judge you for it. Just always remember to ask yourself before buying a status symbol, "What's it going to cost me?" You might find that the item is far too expensive for your bank account and your goals.
• Always figure out the finances sooner. Later they will not work themselves out. They will typically compound worse. Our brains are not built to accurately assess our financial position. A trusty pen, paper and calculator (or excel spreadsheet) have saved me from making some pretty big mistakes.
• There is one exception to that rule, which is the decision to have kids. They make NO financial sense. In this case, you can make the decision from your heart and then figure out the finances later.
• When giving to charity, give first and give from what you have. Try and give anonymously where possible to ensure that it is authentic to your life's mission and not to earn accolades.
• Avoid using language like earning and deserving. You have started out with a pretty big head start. Instead practice the language of gratitude.
• Strive for contentment. Money can drive you down large highways of greed and scarcity. There will always be bigger houses, nicer cars or larger account balances to strive for. But they will rarely bring long-term happiness. But remember, you can use money to find joy, particularly if used to buy time. The small service road is obscure and not heavily traveled. The detour might also require you to shed some ego and vanity, but it's totally worth it. Even if it's a lifetime journey, I promise you will not regret taking that road.
• Use your savings to take chances. A safety net is your greatest gift, and it offers you the opportunity to think more boldly and to try harder for your dreams, whatever they might be.
Take this advice for what it's worth and when it makes sense to follow. I have a hunch that you and your generation will have even more advice to add. That obscure side road will probably get traveled more heavily, in fact. Covid has taken so much away from this young generation, yet you all have persevered in finding joy where you can. If you can remember the lessons from this time, they will certainly serve you well.
Love,
Mama
Sarah Catherine Gutierrez is founder, partner and CEO of Aptus Financial in Little Rock. She is also author of the book "But First, Save 10: The One Simple Money Move That Will Change Your Life," published by Et Alia Press. Contact her at sc@aptusfinancial.com.