Dear Son
I read this article and thought of dropping you a line about where I went (right or wrong) with each of these strategies.
1. Withdraw less than what you deposit. By and large, your mum keeps us on track, but when I was young and before marriage at the age of 25, I used to sometimes go over. It is not fun, and at that time, without an overdraft, this wasn't fun. So simply had a budget on a weekly basis, and if i ran out of money, then the weekend was sitting at home reading books. You are already keeping track of your expenses and deposits, so that is good.
2. Slashing expenses. Well, now its gotten better because we have simply run out of room to keep things, lol, but generally, yes, we do try to slash expenses by keeping an eye on things we can get cheaper. Books I pretty much always buy second hand, but then that goes back to childhood when we simply couldn't afford new ones. That’s the brilliant part of books, you don't have to buy new ones, the ideas and images are the same. My recent hobby of photography is a tad expensive but then again, researching on the net allows you to purchase stuff fairly cheaply compared to shops. Buying insurance and other financial products SHOULD be checked and they can provide quite a lot of savings. Also cutting out eating out helps. We learnt to cook at home and its so much fun :) I understand you spend quite a lot of time outside now that you are a teenager and you like to buy your Nike trainers, and that’s fine as well. Just remember to be careful with your money, son.
3. Start your investment plan. We started this way back. Never pop your money simply into a savings or current account. Sweat your money, put them into an investment fund or buy stocks. Loan your money to companies who can use it to make more money and thus to you. The investments we have made is now enough for both your and your sister’s education and then some, but not enough to give you a helping hand for two house purchases for you two or if you want to setup your own business. So we have to keep on working. I only wish I had started this when I was very young and had started earning, but your grandfather is a scientist, not really living in this world and we never got going that early. You, on the other hand, have been investing since you have been 13 so that is good.
4. Purchase your own property. This is a debate which people will have, some prefer renting, some prefer purchasing. I used to hold on to the idea that its better to rent as we will be going around the world but your mum said that its better to buy. And I think that’s the best idea she had. Another couple of years and we should be free of the mortgage and then one of the biggest drains on our finances is gone. Then we can do more for you two in case you want to go study postgraduate or just take off where/when you want. We also assisted your aunt in her house purchase and also helped your grandparents in their expenses, that helps as well. Well, this is a bit too early for you right now, but your dad is thinking ahead for the time you will need to purchase your own property. So good for now.
5. Be aggressive with retirement goals. Now this is something that I cannot emphasise more. At this moment, your mother and I are putting 1/3rd of our income into retirement planning. This does mean that we go without many things such as the frequent foreign holidays that your friends and their parents go off to, we drive a 8 year old car whereas your friends have a new car every 2-3 years.But that’s fine, our holidays at home and in England are equally fun and frolic. And Henrietta Honda is a perfectly good car, she gets a full dealer service every year and we keep her nicely maintained. I want a transportation device, not something to show off to my friends. But as soon as you get your regular pay check, I am going to try to convince you to setup your own retirement fund with up to 20 % saving. Good habit to have, son.
6. Improve your skills and knowledge. This is again ok for me, you are good in studies and I am happy with your progress. But sometimes you don't show the dedication that one might require. Yes, I understand that you are exploring and you will pick up something and then lose interest. that’s fine at this age. But sometimes I do feel that you give up too easily sometimes. Don't get me wrong, your grandfather used to say the same thing to me, i picked up the guitar and dropped it, wanted to do cost accounting and dropped it. oh! well, that’s what father’s do, worry and obsess about their kids.
Maybe I should add one more thing, get a partner who shares your investment and financial perspectives (hopefully in the saving/investment sense, not in the lets spend it all mode). Money is one of the biggest reasons for divorce and stress in your life, you do not really want somebody to fitter away your hard earned money, you want somebody who shares and increases your common family wealth. Good heavens, I sound like your grandfather here.
Ah! well, homily over. Hope this helps, Son, to help you avoid my mistakes and build on things which I hopefully did ok.
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