Happy Holidays to all. I hope the holiday season has been good to everyone and that it has been a time of relaxation and fun. It’s been pretty great around here. Allyson and I stayed in Denver this year and took it easy, so it’s been a week of sleeping in, opening presents, and getting a lot of house projects done (our favorite). I’ll eventually write up some posts on the projects we finished, like the new floor in the workshop or new towel rack/shelf that Allyson built in our bathroom. First though, I’d like to go through an introductory series on finance.
I’d love feedback as I introduce some key ideas that I think are important for someone just starting out in their first full time job (or someone wanting to make a change from their current financial path). The idea for this series came from my cousin asking some questions about how to get off on the right financial footing when starting at a new full time job. I felt very honored that he would come to me with those sorts of questions and lucky (or unlucky) for him, I went on a bit of a rant with my suggestions. So now I’d like to go back to that rant and try to clean it up and pull together a succinct introduction to finance series, one that will hopefully be helpful for you.
I’ll start with a list of the 10 things I rattled off in my original email and then I’ll write full, detailed posts about each one over the next several weeks:
- 401k or similar – If your job offers a match of any sort for your 401k or equivalent retirement account, contribute at least enough to get the whole match. For a lot of companies this will look like a 50% match up to the first 6% you contribute to your 401k. Make sure to contribute that 6%.
- Budget – Create and stick to a budget. This may come naturally to some people and be like pulling teeth to others. Regardless of which side you’re on, setting and keeping to a budget is a huge starting point to being comfortable with your finances.
- Eat out less – Cooking at home is cheaper and healthier than going out all the time.
- Avoid peer pressure – It is okay to not have every new gadget that everyone else around you has. Having secure finances beats an Apple watch any day of the week and twice on Sundays.
- Limit your commute – Commuting long distances to work is not only boring and unhealthy, it is costly. This is especially key for people before they buy a home. You should always take into account your commute when choosing where to live and based on the numbers, shortening your commute should be one of your highest priorities.
- Communicate with your financial partner – If you have a partner who you share finances with, it is key to talk with them about your collective financial goals. It is much easier to move towards financial freedom if you are both on the same page. This is a good thing to consider even if you’re single or not at the stage of sharing finances yet.
- Shop around – Insurance, cell phone, internet, etc. These are all things that can be shopped around to save money. When I first got out of college I went straight to the insurance company my parents were using for my car. It ended up being a mistake that cost me thousands.
- Emergency Fund – A great way to build financial freedom is to avoid going into debt for minor emergencies. Credit cards or God forbid payday loans have stupid high (should be illegal) interest rates. Building an emergency fund will keep you from turning to them for help when your car radiator blows or you have to fly somewhere on short notice.
- Cut the cord – Seriously, it’s almost 2020, cable is dead. There are a ton of options out there for entertainment. My favorite happens to be free.
- Ask questions – There are a million different approaches and viewpoints on what it takes to take care of your finances. For some reason talking about finances feels like talking about your sex life for some people and I think that holds back our collective ability to learn and grow comfortable with finances. Try to cut through it all and find people you trust to ask questions.
I am really excited to dive into each of these topics of financial literacy! If there is anything you think I’ve missed let me know. I plan on learning through this exercise and there may be 10 more things that I need to start doing myself.