If you have built castles in the air, your work need not be lost;
that is where they should be. Now put the foundations under them.
– Henry David Thoreau
Had a brief, but interesting conversation while shopping in Costco with My Man and his son a few days ago. His son, a senior in college, is a sheer delight. He’s ambitious and charming, with a vivid imagination and a quirky view of life. We were walking down the home furnishing aisle when he made an announcement.
“I’m going to live in a Castle one day, “ he declared, and proceeded to describe how it would have a gym, a pool, a hula hoop court (he’s an amazing hooper!), and all the amenities castle’s typical have, including lots of turrets. The boy was dead serious. I was intrigued.
“Good goal,“ I assured him, and meant it. But even more, I saw it as a wonderful metaphor for the big dreams many college kids have for life after graduation. Problem is, like most his age, he hadn’t really thought through how to make it happen.
“If you start now,” I suggested, “You can definitely make it happen.” He asked for my advice. I was ready to give it, but standing in the middle of Costco, there were too many distractions.
So this blog is meant to help him (and anyone else) build a firm foundation under their future castles.
16 things I wish I knew about money when I graduated college:
1. If you can’t afford something, don’t buy it. Delayed gratification is the gateway to wealth (and a sign of maturity).
2. Despite what you’ve heard, money is NOT power. Money is simply a tool. The trick to getting the most out of any tool is to know how it works and to use it responsibly.
3. Understand the miraculous power of compounding—where your money earns interest, then your interest earns interest, and then that interest earns interest, and before you know it, you’ve got a lot more than when you started.
4. Make savings a habit. Every month, have a small amount–say $5 to $10–automatically transferred from your checking account to a savings account.
5. Consistent savings, no matter how tiny, adds up quickly.
6. Always have a Safety Net…just in case—accumulate at least 6 months of living expenses, to be used for emergencies only.
7. Create a Fun Fund for short-term purchases, like a ‘gotta-have’ video game or a weekend getaway—open a separate savings account, or simply drop spare change in a jar.
8. Begin now building good credit. Apply for a credit card and use it responsibly, which means paying it off every month (refer back to #1!)
9. Never, I mean NEVER, get into credit card debt (not for a castle or the carpet or even a couch). Mounting credit card bills destroys your peace of mind and your quality of life. What good is a castle if you can’t enjoy it?
10. Keep your checkbook balanced. Even better, put everything on Quicken. Clarity (knowing precisely how much you have) is power.
11. Learn about investing. Take a class. The only way to make sure your money grows (enough to buy a castle and also maintain it!) is by putting at least some of your cash in long term assets (like stocks & bonds) that will grow faster than inflation and taxes will take it away.
12. Never invest in anything you don’t understand. Otherwise, you won’t know what you’re buying; you won’t know when to sell; and you can’t accurately evaluate the advice you’re given.
13. Don’t put off investing until you’re older. If you start now, regularly investing small amounts (in mutual funds), that money will grow into millions. Really!!!
14. Own and respect your value. Never settle for less than you deserve or desire. Always ask for more than feels comfortable.
15. The biggest financial risk you can take is to ignore your money, and do nothing at all.
16. Read biographies of wealthy, successful people. They’ll inspire you to think bigger about what’s possible, and give you the fundamentals for making it happen.
That’s my advice. But it’s certainly not a definitive list. I’d love to hear from others. What would you add?
Barbara Stanny
The leading authority on women & money
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