Editors Note – this article is part of our series “Best financial advice I’ve ever received.” People frequently ask bankers the best piece of advice they have ever gotten. So for this series, we’re asking MidWestOne employees to share the best money management tips they’ve ever gotten.
The best financial advice I ever received has accumulated over time from reading books by Dave Ramsey and Art Williams, and from my 25 years of experiences in banking. One of the key things I’ve learned from them is:
Find the inspiration to save, create a financial plan and stick with it.
Ramsey and Williams’ advice speaks for itself. Everyone needs to start with a financial plan – it’s the most important piece of the puzzle. The inspiration to create a plan is where many people often struggle.
It’s like working out; if you never get off the couch the first day, then you will never end up with the results you want. For some people, inspiration comes in the form of a life-changing event. For others, they may just say one day: “I’m sick and tired of chasing my tail so far into debt; if I don’t create a financial plan now, I’m never going to get out of this hole.”
Once you find your inspiration, create a financial plan that will help you prepare financially for your future. Your plan should include your short-term and long-term goals and what steps you want to implement to help achieve those goals.
Ramsey and Williams share lots of valuable financial lessons, which have provided inspiration to me. Here are some of the other things I’ve learned from them and others:
Pay yourself first.
The bottom line is, no matter where you gain inspiration from – Dave Ramsey, Art Williams, Clark Howard or the many other financial strategists and financial planners in the world – the key is to chose a savings program and do your absolute best to live within the guidelines.
Paying off your debts is important, but also commit to moving funds into a savings or investment account on a weekly or monthly basis. You will be amazed how fast even the smallest amounts add up.
Adjust your priorities and lifestyle.
Priorities and lifestyle choices can be an issue for some people. I see people who are spending money on things like expensive cell phones, traveling, high priced vehicles, or constantly eating out – but they can’t afford or struggle to pay their monthly mortgage payment.
The bottom line is this: the only way to save money and get out of debt is to spend less than your household takes in. Adjust your priorities and lifestyle if you find you aren’t able to save. It can be that simple.
It’s not what you make, it’s what you spend.
I have witnessed middle income households who have a nice home, live comfortably, seem to have everything they need, and are building wealth. On the other hand, I have also seen “high income” households that drive the nicest cars, have the biggest boat, or a second home, but struggle to make all of their monthly payments. I am not against owning toys and nice things – that is not the point. The point is, don’t own these items at the expense of saving and building wealth.
When I first read this financial lesson, like almost every other college student, I didn’t have a lot of money myself. I was just out of school, didn’t have a lot of savings, had student loans and some credit card debt. I hadn’t been in my job very long, and I really took this advice to heart. As I’ve moved through my 25 years in banking, it’s continued to grow on me, and know that it’s a pretty powerful lesson.
Track your finances
To stay on track with your financial plan, track your finances. Businesses are asked all the time to produce monthly or quarterly statements to monitor their financial progress. Why wouldn’t you do that as an individual or as a household?
Track your finances by creating a personal monthly statement of all your incoming funds and outgoing expenses. This type of organized approach will help you monitor and track spending, realize where you are spending your income, and help you accomplish your financial plan.
Also, recognize you can’t do it all yourself. Find someone who can help you with the financial planning journey. MidWestOne provides a variety of services that can assist you with financial planning. Contact any of our Personal Bankers or Investment Banker’s at one of our 18 branch locations for additional help.
Build wealth and give.
The ultimate position you want to find yourself in financially is to be able to build your wealth and give to charity. In my opinion, the giving piece is what your end result should be because it helps other people who are less fortunate. By helping yourself, you’re really helping others.