I starting writing this blog mostly as an advice column for my kids.  I’ve taken what opportunities I’ve had with them to sit down and explain the importance of budgeting, investing for the long run, and making smart decisions, but those conversations are not as thrilling as they sound.  It’s really, really tough for a teenager to look away from a YouTube compilation of people doing crazy things to hurt themselves so you can explain the beauty of index funds.  And I get it–I don’t think my YouTube channel called “Successes” would get nearly the number of hits.  They indulge me and they are great listeners, but this blog will always be sitting patiently, here when they need it.

Always a lover of math puzzles, I’ve made personal finance a bit of an obsession.   As I’ve gotten older I’m constantly amazed at the amount of bad advice out there, and how financial salespeople feed people’s fear of math and investing know-how into making decisions that really only makes the sales person rich.  I’d like to try to fix that.  The math isn’t scary–I’ve worked through all of what you’ll need that I’ll readily share–and the knowledge required is amazingly simple.

Often what people are looking for is what are those “magic” investments that pay insanely high returns with almost no risk. Somehow there is a belief that there are people out there in the know, working their way through the system, hopefully legally, to get richer.  I still hear infomercials on the radio using lots of words like ‘smarter strategy’ basically implying they have found that low risk/high return investment to get you rich with almost no capital.  I’ll write a separate blog post on the ridiculousness of this argument, if there are loopholes of return without risk, they are quickly closed.  But people hear this and think, man, I need to be part of that action if I ever want to be financially secure. Thankfully, cheaters and scammers aside, there really isn’t a shortcut, and furthermore, you can get there without a shortcut.

So what to do? First of all, the mega return on investment is not that necessary, boring and average is just fine.  What is really important is DISCIPLINE. The discipline to automatically and consistently save money, month after month, year after year.  The discipline to not keep up with the Jones’ and not satisfy every wish and desire at the expense of your financial freedom. You need to save as much as your budget can stomach. Very few young people (or old people) get this. If you get it, you will grow your nest egg. Yes, hopefully you are investing smartly, and I do have some advice for this, but the most important thing is to invest consistently.  Don’t sweat too much trying to find that ultimate return year after year.  Even professionals can’t do it, though many claim they can.

The next question is, how much do I save every month?  That is where a good budget comes in.  You need ruthlessly adhere to a budget, and coming up with a budget is not difficult, I’ll show that in my next post.  You can’t really know what you can afford to save unless you know what you really need to spend.  Hopefully the money budgeted on expenses is less than the money coming in.  If not, you need to make some cuts.  Painful if need be, but you cannot support a lifestyle by going further into debt or stealing from savings.  Lots of young people fight this because they figure they are young, shouldn’t this be the time they are living it up?   Well, yes, but that can’t be at the expense of your future, which will only lead to greater stress in your life.  So allow some money in your budget for fun, but if you really want to set yourself up for your future, you need to save early and as much as you can.

All of this is really about freedom (this is another rant coming, prepare yourself).  As long as we NEED to work, all of us are servants to some degree, we are never truly free.  Hopefully you like your job, but few of us would continue coming in if the little pieces of paper that come every two weeks stopped.  Having complete financial freedom is about having options, where money does not have to be part of the equation in your decisions.  So you can keep doing that job you love if you’d like until you’re 90 and that is your choice.  Or, with a big enough pile of cash, you can do what you want, when you want, as much as you want.  That is freedom.

I’ll touch on a these topics in more detail in later posts, but this hopefully gets you fired up to save some cash!  Well maybe not fired up, that’s just me.  Slightly motivated?  I’ll take it.