Bad financial advice can ruin your long-term plans and potentially rob you of the future you had hoped for. However, good financial advice (when applied) blossoms and continues to flourish in all areas of your life, even improving the lives of others along the way.
The Cheat Sheet took some time to speak with top experts in the field of personal finance about the impact of good and bad financial advice. We spoke with Certified Financial Planner Jeff Rose of the blog Good Financial Cents, The Money Coach Lynnette Khalfani-Cox, and CreditCards.com’s Matt Schulz. We asked them to share the best piece of personal finance advice they ever received. Here’s what they had to say.
Don’t be mastered by your wants
“The best personal finance advice I ever received came from a finance professor in my junior year of college. The professor had asked members of the class to raise their hand if anyone had intended to buy a new car every three to five years. Already having my sights on a BMW upon graduation, I quickly raised my hand. This is before I knew anything about the power of compounding interest. That professor showed me what a $300 monthly car payment could grow to be over the course of my working life. It was a huge eye-opening experience. Because of him, instead of buying a BMW upon graduation, I drove my grandmother’s 1998 Chevy Lumina for the first several years of me being a financial advisor. That allowed me to max out my Roth IRA and also partially fund my 401(k), which has well positioned me for a successful retirement.”
Know your worth
“I’ve received a lot of good financial tips over the years. But one of the best pieces of money advice I’ve ever gotten came from my sister Debby, who, unfortunately, recently passed away. Debby had a philosophy that you should always bring your A game and know your worth. What this translated to, in practical terms, was a sense of always being excellent — especially professionally — and then expecting to be compensated and treated accordingly. Because of Debby’s influence and advice, I’ve always seen myself as a professional who strives to over-deliver and be the best. This mindset has served me extraordinarily well financially throughout my career, both as an employee and as a business owner.
During my past years in corporate America, I was handsomely paid, and constantly rewarded with promotions, bonuses, awards, and more. Bringing my A game and knowing my worth have helped me even more as an entrepreneur over the past decade. No matter which role I’m serving — as a money coach, author, speaker, media spokesperson, or media trainer — I’m not afraid to negotiate or ask for what I’m worth, and I don’t blink an eye about my pricing or the value of my services and my time. I wish more people, particularly women and millennials, would understand their value like this, personally and professionally.”
Practice targeted savings
“I’d say that the best personal finance advice that I ever got came from my wife back before we got married. She always stressed the importance of saving, and it’s made an incredible difference for us. She stressed targeted savings. You put some away for retirement. You put some more away to save for a down payment on a house or a car, or whatever your next big purchase will be. You put still more away in an emergency fund because you never know when the next economic crisis or health emergency will come about.
It’s not always easy, especially when you’ve got plenty of other bills to pay. However, if you keep saving over a long period of time — and increase the amount you save as your career progresses and your salary grows — that savings will grow steadily and be there for you when you need it.
That savings can save you thousands of dollars in interest in the long run by increasing the down payment you can make on big purchases. What’s more important, however, is that those savings can help you sleep more soundly at night knowing that if disaster strikes, you’ve got a financial cushion that can help you get through it.”
Matt Schulz, CreditCards.com Senior Industry Analyst