Contributed by: Sandra Adams, CFP®
A colleague of mine and I were recently presenting a session on Savings for Junior Achievement for a Detroit High School class as part of The Center’s Financial Literacy initiatives. As part of our presentation, we both shared personal stories about how the fundamentals of budgeting and savings had personally impacted us during our earlier years. Why am I sharing this with you?
First, it was a good reminder that our perspective about money certainly changes over time. Thinking back, I now realize that how I think about money now is certainly different than how I thought about money in my teens and twenties. This is important especially when we are talking to our children and grandchildren about handling money.
Second, it was a good reminder that our experience teaches us good lessons. The things we have been through over our lifetimes, especially with money, sticks in our minds either positively or negatively. Positive experiences and behaviors we will tend to repeat and negative experiences and behaviors we hopefully will learn from and NOT repeat. Although some people take longer to learn than others.
Third, and most importantly, I was reminded with my own story that sticking to the financial planning basics works.
The Basics Are:
Paying yourself first. (Building savings to yourself right into your budget!)
Living within your means (spending first for needs and then for wants; spending for wants only if there is money in the budget).
Building a savings reserve for emergencies.
Building savings in advance for short-term goals.
Not accumulating debt that is not needed and paying off any credit in the money that it is accumulated.
And once you can do all that, building long-term savings for long-term goals like buying a house and retirement.
At one point in my life, I was in a real financial hole, but by sticking to the basics and having a lot of patience, I slowly dug myself out. And I sit here today being able to say that by following the fundamentals, you can be financially successful. Sticking to the basics works!
Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.