Every financial services guy I see touts some kind of common sense guide for “capital accumulation” targeted at young twenty and thirty “somethings”. Then there are always the guides for the 40-60 age groups that borders between crisis management and locking the windows. A lot of it makes sense and is really the realization similar to weight management: calories in vs calories out!

Allow me to throw my two cents in. If you recognize your excuses here, you aren’t alone.

Emergency fund

Most people never make it past this point. If they did, it is probably because they went around it! Let me be clear, you have no business investing, buying, traveling, treating, splurging, or any other synonym or excuse if you haven’t put aside SIX–months of living expenses in cash. This is never to be touched for anything and should serve as your safety net for a rainy day…and trust me; it even rains in the desert. That day will come. We can now move on!

Housing

Nobody wants to live in a tent. Nobody wants to live in an unsafe area or in squalor. With that being said, many young people stretch far beyond their means, especially when it comes to a rental. Coming from downtown Chicago, I remember how if you weren’t down in the “hub” of Rush Street” you were a “non-player”. I felt I had to compete with the 30 and 40 year olds, which was ridiculous. The rents down there were 2-3 times as much as if I went 2 miles north. It is one thing spending your money on rent and another on a mortgage. As a “rule of thumb”, experts recommend a cap of 30% that rent should represent of a person’s total income. Don’t lie to yourself with the “big hat, no cattle” mentality. That was a saying from the old west where the bigger the hat you had, supposedly the richer you were. Wealth was measured by how many head of cattle a person owned. Remember, the more you spend on rent, the less available for investments down the road. Speaking of the ‘road”, my favorite, next.

Cars

“But it’s an investment!” No, it’s not. “I’ll save money in the long run”…no you won’t. I have heard them all and probably have said them all. Cars are the worst investment ever (with the exception of collector models) and are usually a luxury unless you live in the country and don’t have a choice. Your selection will go far if you are honest with yourself on its necessity and ultimate purpose. Getting girls is not considered a necessity for this exercise!

Holy Grail

Like in the 1989 movie of Indiana Jones and the last Crusade, the Grail Knight warns Indiana to “choose wisely”. I’m telling you also to choose wisely. Today’s premature expenditures are almost certainly the thief of tomorrow’s comforts. While you are in your 20’s and 30’s, no one is really judging you. No one expects you to be living on an estate or travelling every weekend. Take the bus or public transport. Wear a realistic watch, live at home for that extra year. It’s easier to do it now than later.

Saving

Experts recommend saving at least 10% of all you make. As this “stash” grows, people are constantly spending time on investigating avenues to invest this. Here is my last bit of advice. Don’t worry about this. Yes, that’s right…don’t worry. Let it accumulate. You aren’t missing out on anything with interest rates being at zero.  There is no shortage of places to invest and the more you have, the greater the options are. Spend your time making more money; there will be plenty of time to worry about what to do with it later. I believe by taking the longer road, like the tortoise and the hare, you’ll end up better

I’ll see you at the Mercedes Dealership soon.