As I was driving to get breakfast this morning and listening to the latest economic news, I began thinking of all the ways I could take advantage of our robust economy: investment and tax strategies, ideas for businesses, etc. It then occurred to me that I have come a long way since I was a teenager, but still the process of personal and professional growth, as everyone ultimately experiences, has been a lifelong series of trial and error.

As someone that still has young people in my family circle, what could I share with them now that may change the trajectory of their journey through life and hopefully help them avoid some of the common mistakes we all encounter at some point?
I think I would break it down into two overarching principles, mainly to keep it simple enough to understand and remember:
· Invest in yourself
· Invest in the future
When I say invest in yourself, I mean these things:
· Educate yourself as broadly as possible. Learn about everything that interests you but also about things that you are not interested in, at least at first. The goal is to gain perspective and insight into the world and everything in it. Become a lifelong learner and develop a curious mind. You will find the more you learn, the more you want to learn!
· Develop skills and talent that are economically valuable.Please don’t fall into the trap of “find something you love and then try to figure out how to make money from it”,at least not at first. To eventually do something for no other reason than you enjoy it, you will need to set the foundation first, and that foundation should earn an income that allows you save and invest for that day when you can be financially independent and then do whatever you want!
· Travel the world. I have friends that rarely leave the comfort zone of their neighborhood and miss out on so much from never standing on foreign soil. As a result, their perspective becomes ever more myopic and narrow-minded. One simply cannot experience the world from the internet or the Travel Channel, because many of your senses are being deprived of the experience. The heat of the Arabian desert, the smell of Paris in the spring time, or the crisp, cold air of Colorado in the winter will change your perspective on life and boost your spirit. Make plans to explore and enjoy this planet we live on!
· Learn a musical instrument. Music is a powerful influence in our lives, but even more so when you are able to create and play music yourself. There is significant research to support that music has a positive effect on the brain and is a catalyst for development of cognitive, fine motor, and critical thinking skills. One noteworthy program is the Music And The Brain program based in New York City. Plus, once you develop a love of music in all its forms, it will enrich your life and get you through both good times and bad.
· Develop lifelong relationships. Don’t worry about the quantity of your friends, focus on the quality of your friends. It is better to have a few close and sincere friendships than a room full of acquaintances. Remember that friendship is a two-way relationship, so be there for your true friends when they need you and expect no less from them. There will be ups and downs as you go through life, but it is much easier when you travel that journey with others that were there from the beginning.
· Take care of your health. As hard as you work and focus on your life goals, if your health declines you will not be able to truly enjoy the fruits of your success. I recommend participating in a sport, both for the exercise and the team building that will serve you later in life. Take the time to be active, and to watch what you eat. Your body will give you what you give it – unhealthy eating habits will eventually catch up with you. Develop a holistic approach to health, taking care of your mind, body, and spirit.
Now to explain what I mean by investing in your future. To some degree you have already done that by investing in yourself; you have the education, perspective, and relationships that will serve as your safety net no matter what comes your way. Now, we will discuss how to get to the next level and what many people never learn, the financial wisdom that will change the quality of your life.
Some of the principles that Dave Ramsey preaches are certainly worth doing, but the best advice I believe I would impart is the art of discipline. It is not easy to forgo something you want now in order to save for something better down the road. We have been conditioned for instant gratification in our society; buy now, pay later. The problem is “later” can become a lifetime of paying off debt as a result of impulsive spending.
The best advice I can give is this:
· Become a Saver. Pay yourself first, always. Set up a direct deposit transfer from your checking to your savings or even better, to an investment account and do not touch it. This is your path to wealth! There is a widely known book called The Automatic Millionaire that has the “latte” rule – take the $5.00 you spend on that latte every morning and put it in your savings account through an automatic deposit, and eventually through the power of compounding alone you will have a lot of money over time. Plus, the earlier you start (now!) the greater the impact as you will have decades to build wealth and although you’ll live below your means early on, eventually you’ll be able to live the life you want for yourself!
· Live Below Your Means – Most people fall into the trap of spending everything they have, as they earn it.There are many reasons for this – you have children that have needs, you buy a house and then it becomes a money trap of repairs, taxes, improvements, and endless maintenance expenses, or you simply develop a short-sighted view of living in the present without thinking about the future. Here is the key: it is not how much you make, but how much you save and invest that will make you rich. There is a story of a man that was in an hourly job his entire life, no one thought he had anything much of value, until he died. It was discovered he was actually a millionaire and had left his family considerable wealth, all on a low-pay hourly job, because he lived well below his income, was a lifelong saver, and took advantage of compound interest.
· Invest Wisely – First of all, invest. The best thing you can do as a young person is buy some common stock, leave it alone, and watch it grow in value. You won’t have to pay taxes on it until you sell it, and all dividends will be reinvested which will make the value grow even more. It is reasonably safe to buy some index fund stocks that are diversified across the entire Dow Jones index or S&P 500 for example. Then, your investment will grow as the markets go up over time, and even with occasional dips and recessions, the markets always go up long-term. If you were one of the lucky investors to buy Netflix in May 2002 for $1.21 a share, when the technology bubble had burst and everyone was dumping tech stocks, your investment would now be worth $363.09 as of Friday’s close! In other worlds, you would have made 30,000% on your investment! As a personal side note, I bought Netflix that year but eventually sold it to cash in my profit. You know how badly I regret that? A lot! All I would advise is to do some due diligence and pick stocks that are not too risky, but at the same time, while you are young, you have the luxury of watching a stock rise and fall and not have to sell it at a loss, which brings me to the next point.
· Dollar-Cost Average – As you are establishing your investment account, your stock holdings (positions) will rise and fall, which is perfectly natural. The trick to minimize your risk is to use a concept called dollar-cost averaging: invest a recurring dollar amount in a stock over time to build your holdings. If the stock price rises, you’ll purchase less shares, and if it falls, you’ll be able to purchase more shares. Over time, your return on your investment will average out, stabilizing the risk of market fluctuations. This is the same principle that retirement 401(k) accounts use. The side benefit is a recurring investment schedule will force you to keep building your investment account.
· Plan the End of your Career – The sooner you can plan your retirement, the better off you will be, and the best time to do that is right out of the gate. Unfortunately, no one does this because we all think retirement is something that will happen far, far off into the future. If you can invest in just one Roth IRA or other tax-deferred account in your 20’s or even 30’s, you are far better off than most people. That account, however small, will grow over decades and can make the difference in retiring early or being a greeter at Walmart. If I had it to do over, I would have held on to every stock I sold and started saving for retirement by age 30.
· Understand Liquidity – Many people will tell you to buy a home, and in general that is good advice. It forces you to save by building equity as you pay down the mortgage, plus the home should appreciate to become one of your biggest components of net worth. The downside of home ownership is you may spend a good portion of your equity over time to maintain it with the endless taxes, fees, permits, remodels, and unexpected repairs. My advice is if you want to buy a home, consider a few things first. Do you plan to stay there for at least 10 years? Are you able to budget for a 15-year mortgage to pay it off as soon as possible? How does it fit in with your other personal and career goals? If you expect to relocate every few years as your career evolves, don’t get tied to real estate! The lesson here is don’t accept the standard advice that buying a home is always a good idea. Know your personal situation well, the dynamics of the local market, and think it through carefully. It is very easy to buy one, not always so easy to sell it and get your money back, especially on short notice from an unexpected event in your life, and a short sell or foreclosure can be devastating to your financial well-being.
I could probably go on forever with the lessons I have learned the hard way over the course of my life. I just hope some of these key points of advice resonate with the young people I know, and they will take charge of their personal and professional goals and hopefully achieve every single one of their dreams. I believe in you!
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