I’ve made plenty of financial mistakes throughout the years. Some such mistakes haven’t been a big deal, while others have cost us big time. In an effort to ensure that my own children don’t make such mistakes, or at least go into such situations with their eyes open, I’m making a list of items to communicate to them before they reach adulthood. In this way, while they might still make mistakes of their own, they’ll at least move into adulthood with a better understanding of the potential pitfalls that may await them.
Owning before knowing
Maybe some people just know they’re right for homeownership. You can’t count us among those people though…at least not with our first homeownership experience.
If I was to pass any advice along to my own children about buying and owning a home, it would be, “Know before you go.”
We rented apartments for nearly 10 years after graduating college. It was a lifestyle and living situation we (and especially I) enjoyed. Then, rather than buying a condo or renting a single-family house to experience just what ownership was like at a lesser level, we jumped in headfirst and bought a home. To make a long story short, we sold three years later at a huge loss but with a full understanding of just what is entailed in owning and maintaining a home. We now live in a condo where we get a taste of being homeowners but not the whole meal.
Leaving a secure job without a new source of income
I’m self-employed. I’ve been self-employed for nearly seven years. I left a good-paying job with nice benefits and great job security to venture out into the career unknown.
While I don’t regret my decision, and I hope that my children one day have the chance to experience being their own bosses and making their own career decisions too, I might handle the transition process differently had I to do it again, and would likely advise my children in the same way.
When I left my stable work role, I had no new line of income in place. While I had a plan to get my new career as a writer started, I’d yet to earn any actual income from this new role. While I’d planned ahead and saved up a reserve fund to carry me though this startup phase, getting started took longer than I’d planned. This left me without any real income to speak of for nearly an entire year. It hurt my personal financial situation and I wish I’d at least set up a few income generating sources to get me rolling before I left my regular job.
Put it away and let it stay
As a self-employed individual without much additional funds to contribute to my retirement savings, I have rolled my previous employer’s 401(k) into an IRA, the entirety of which is in a dividend paying income fund. While I’m happy with this fund’s performance, and it allows me to grow share total through dividend reinvestments without contributing further to the account, I probably should have put more into the fund when I had the ability to do so.
Now, as the fund continues to grow without my having to touch it, it act as a valuable lesson that I’ll pass on to my children, explaining how putting money away while their young and letting it sit can allow these funds to continue to grow on their own without their having to do anything to them. With time on their sides, I hope they listen to this advice as it can have them amassing money over time and letting it better even out the ups and downs of the stock market.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.