What Is Your #1 Piece of Advice for Financial Literacy?

[Realist]

1.  10% never lent, never spent.  Pay yourself first through investment and/or savings.  Always.

2. In a monetary debt based keynesian system, always invest "some" in sound tangible assets.  Inflation will never stop, and will never end.

[jostermacedo]

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@Varsity_Lu wrote:

My son is taking a financial literacy course and he is going through a variety of topics.  It got me thinking: what would you say your #1 piece of advice when it comes to personal finances is? I'm not talking just credit cards.  Any aspect of your financial health?  If you could only tell someone one thing to do, what would it be?

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Understand the effects of compounded interest. It can work for you or against you, but it pays to know how it works.

[ptatohed]

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@jostermacedo wrote:

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@Varsity_Lu wrote:

My son is taking a financial literacy course and he is going through a variety of topics.  It got me thinking: what would you say your #1 piece of advice when it comes to personal finances is? I'm not talking just credit cards.  Any aspect of your financial health?  If you could only tell someone one thing to do, what would it be?

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Understand the effects of compounded interest. It can work for you or against you, but it pays to know how it works.

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How does it work against you?

[jostermacedo]

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@ptatohed wrote:

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Understand the effects of compounded interest. It can work for you or against you, but it pays to know how it works.

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How does it work against you?

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A few examples:

If you have interest bearing debt.

If you start saving money too late in life.

On decisions of saving now and spending later vs spending now and paying interest.

[TheRedHat]

Take the time to learn about investing for today as well as for tomorrow. People are too focused on investing for retirement. Asking someone to put money away that they won't get to use for another 40+ years (assuming they live that long) really isn't all that appealing. Instill in them a principle of investing money in a variety of money market funds, etc. and watching it grow until it is large enough to start living off the dividends is much more exciting.

[Varsity_Lu]

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@TheRedHat wrote:

Take the time to learn about investing for today as well as for tomorrow. People are too focused on investing for retirement. Asking someone to put money away that they won't get to use for another 40+ years (assuming they live that long) really isn't all that appealing. Instill in them a principle of investing money in a variety of money market funds, etc. and watching it grow until it is large enough to start living off the dividends is much more exciting.

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I'm definitely not at this point yet, but I have made the shift to investing/savings in a more deliberate way.  I posted a while ago about how I started use savings buckets (i.e. multiple HYSA) not quite a year ago and it has revolutionized my outlook and approach to budgeting.  Retirement savings is not the only important type of savings.

[FICOdawg]

The day you start working, put in 10% of your pay to your 401k/retirement I don't care how painful it is..   By 30 you should be saving 15% of your pay.      You can't beat the effects of compounding.   There is ALWAYS an excuse not to save but when you hit 50 and have a nice nest egg you'll thank yourself later.

It's not that hard to become a 401k millionaire if you start early.    Sadly, only 13% of people in the US reach it.     Save now and reap the rewards later.

[boxmover]

My favorites have shifted throughout life, in order, probably by decade:

You can only spend each dollar once.

Do not sign anything you don't thoroughly comprehend.

Audit your own books when the bookkeeper leaves.

Never trade unsecured debt for secured debt.

Live like you're poor or you will be. 

You work for your money until you make it work for you.

Btw I feel that this is a super great question topic, wish I had an elevator pitch type answer. Also it seems as if an individuals top advice may be from the hardest lesson learned, as my mind went through so many past mistakes made!

[Realist]

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@FICOdawg wrote:

The day you start working, put in 10% of your pay to your 401k/retirement I don't care how painful it is..   By 30 you should be saving 15% of your pay.      You can't beat the effects of compounding.   There is ALWAYS an excuse not to save but when you hit 50 and have a nice nest egg you'll thank yourself later.

It's not that hard to become a 401k millionaire if you start early.    Sadly, only 13% of people in the US reach it.     Save now and reap the rewards later.

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This 100%.

10%, never lent, never spent.  Invest.  Pay yourself first.

[AndrewF]

My biggest piece of advice is that if the financial literacy course is provided for free from a credit card bank, you probably don't want to do that.

Capital One was doing one through Khan Academy and it was very basic and patronizing. 

I think the cornerstone of financial literacy is frugality and saving the money and buying things you have only when you have money for them plus ample savings.

Banks that want to lend money to people want them to focus on credit scores and opening loan products that deplete their net worth, and that's not because banks are "evil" it's just the business of lending money, so why take "financial literacy" from those people?

Too many people are in trouble because they go "You know, I think DoorDash and Disney World and all these streaming apps are in the budget. And maybe I should buy a $90,000 Cyber Truck." not "I think we'll stay in, cook generic food at home, and watch library movies. Maybe a Honda Civic will get me to work and doctor's appointments."

Sadly, you see many of these people after they are already in that predicament and wanting to know how to get out. Debt is a monster that you don't need in your life because then the choices are really simple. Too much work or a bankruptcy.

Just work, be modest, and don't do dumb things with money. Then, barring a catastrophe, most people will be fine. Save, save, save.

I have major surgery coming up. For once in my life I'm proud of myself I am not scared about what's left after my insurance pays.

It says a lot about this country that more people in my situation would be afraid of the bank than the bone surgeon.