Financial Lessons – Live & Learn

Financial Lessons – Live & Learn!

We experience events throughout our lives. The events can be positive or negative, and impact us in both good and bad ways. Each event can teach us lessons that can be difficult to endure when going through them, however, they are critical to our overall success in life and being able to achieve a successful, fulfilling and happy future.

We can learn from every event we encounter. Personally, I have learned so much throughout my life, personally, professionally, and financially.

Each lesson I have learned has helped me achieve things in my life, like becoming financially independent, not being afraid of being alone, and always being grateful for things I have learned on this journey called “Life”. They have been good lessons for helping me become more financially prepared, as well as life in general. With any luck they will make you think about your life now, what you have learned, what you still need to learn, and also where you want to be in the future.

My hope is that my “financial” lessons will inspire some thought and help you change or improve your life for the better. Never stop learning! Live and learn!

Lesson #1: When you want to do something, find others who have already done it and learn everything you can from them.

No need to reinvent the wheel!

When I decided I wanted to achieve financial independence, and possibly retire early, I not only looked for everything I could read and learn on the topic, but I searched for people who have already gotten themselves there. I find it inspiring to see people my age and younger that have achieved their financial goals in a short period of time. I learned that it helps to find others who are most similar to you – similar paying job, similar spending habits, and similar hobbies – to modify how you live, and change your habits, to achieve your goals.

As the saying goes, you don’t have to reinvent the wheel. If other people have found success in the same goals that you have, follow them, talk to them, learn everything you can from them, to help find your own success.

investments grow
Let your investments grow over time

Lesson #2: The best way to invest is to find low-cost index funds, invest as much money in them as you can live without, and then leave it there and let it grow.

When I first wanted to invest my extra savings, I was scared. I knew nothing about the stock market and what stocks to pick without losing money. A friend recommended I use his friend who was a financial advisor at one of the big investment firms. Alright – I’m in! I started giving him my money to invest and I didn’t have to do a thing… little did I know that the firm was taking 2% of my money in investment fees every year. He also invested in companies and funds that were specific to that firm. He always managed to talk to me in finance lingo that I didn’t quite understand and I was too busy with other things in my life to care that much, so I just told him to go ahead and invest in what he thought would be good.

As I learned, this was not a good way to invest my money. I should have learned a little about investments and the best options for me and my risk tolerance in the market and managed it myself. Additionally, when you invest in low-cost index funds you are already diversifying your money, and picking the right index funds will keep your overall costs low. Lesson learned the hard, costly way, but I have educated myself about the right way to invest to achieve my goals and I’m now full steam ahead.

Learn about low-cost index funds and how they have performed over time to determine if they are the right investment option for you.

Lesson #3: Figure out your investing plan (e.g. risk tolerance, asset allocation, etc.) then remove yourself and your emotions much as possible.

When you put too much of yourself into your investing plan the markets ups and downs have a huge effect on you. In 2008, when the market quickly took a downward spiral, I was so worried that all my hard earned money was gone, never to return. I was still emotionally attached to my money and also didn’t understand the market and what “corrections” were.

Unfortunately, an emotional attachment (especially to your money) can literally make you sick. Sick with worry, sick with frustration, and sick with regret. However, what I didn’t realize was that this is what can happen in the stock market, and this was my first real vested interest in seeing this happen and “losing” so much money. I also didn’t know that the market [historically] always comes back from a correction.

So, although I am still heavily invested in the financial markets, I am in invested for the long haul and don’t worry about the markets daily ups and downs, or that there may be a big correction coming up. I know what my plan is and check in occasionally to make sure I’m still on track.

happy face
Don’t put off your happiness!

Lesson #4: Don’t put off happiness!

I believe happiness should always be our primary goal in life. (That’s my opinion today and I’m sticking to it!) We often have a hard time of putting our happiness first because we often want to please our family, friends, neighbors, and coworkers. We often want to make sure others are happy, and by doing so, we sacrifice our own happiness. When you think about it, how sad is that?

There are goals we all want to achieve in life. It may not be financial independence like mine, but everyone has goals that are unique to them. It could be traveling the world, writing a book, seeing your kids succeed, or maybe fulfilling your passion in basket weaving. Life is too short to put off happiness now. If we put it off, we may soon find we never get to a place to truly be happy. I’ve been through so many ups and downs in my life that I’ve finally found ways to ensure my happiness is never sacrificed while still trying not to disappoint others. Don’t worry, be happy!

helping hands
Help educate others, but don’t force them.

Lesson #5: Don’t try to force your financial beliefs on anyone.

I always want to communicate the benefits of saving to others. However, I have learned to keep my mouth shut unless someone specifically mentions that saving, frugality, and financial freedom is a goal of theirs. I try to communicate the benefits in ways that will help or motivate the specific person I’m talking to, since their motivations may be much different than mine.

I also think one of the reasons I try not to force my beliefs on others is because it annoys me when others force their opinions down my throat. I think we often find ourselves in a rut of our own opinions, beliefs and thoughts about what we want to do and unless you start to see the benefits for yourself, it is rare that we start to follow a path on a journey to financial freedom, including saving more and investing wisely.

Lesson #6: If you know you don’t know how to do something, find an expert to help.

ask an expert
If you don’t know something, ask an expert!

This is a big one for me. I truly doubt that anyone is an expert in everything. I know there are certain things that I’m really good at (accounting, math, frugality), things that I’m pretty good at (writing, investing, organizing), and also things I’m down right bad at (crafts, home repairs, car repairs). Over time, I’ve learned that if I don’t know how to do something, I need to find help or hire someone to do it for me. Being frugal, I always try to see if I can learn to do something myself. However, there are things that either: 1) I need done correctly without errors the first time or 2) It is too dangerous to do myself like electrical work or fixing my roof.

When we don’t know how to do something, experts are out there and many are willing to help at no cost and will happily offer suggestions. It is also important to recognize that asking for help is not a sign of weakness, but a sign of strength in knowing where we lack expertise. The internet is a huge resource for asking any question that is on your mind.

Financial lessons can help you throughout life. Although they have a bigger impact mentally and emotionally on you, they will truly help you grow as a person. Experiencing financial lessons and hardships, and then being able to come back from them, is one of the most rewarding experiences you can have. Hopefully you will be able to learn and experience things while you are young since you will have more time to bounce back from them, but life is an educational journey.

never stop learning
Never stop learning!

4 thoughts on “Financial Lessons – Live & Learn

  1. I really like your ideas, especially because I have thought in a similar way. For example in number 2, I could not agree more that you need to understand what you are doing. At least the basics. Then you can let an expert do the work but you need to look over it at some time with the long-term in mind.

    The emotion – is that not the hardest part? To remove it as you say. At least that is not easy for me, any ideas the best way to do it?

    1. I think removing emotion is definitely one of the most difficult things to learn how to do and actually continue to do. I recommend coming up with a plan for your long-term success of different goals and tracking your progress toward those goals, knowing there will be short-term ups and downs. It’s easier if you think long-term than short-term to remove emotions from the mix.

  2. Living and learning. Probably one of the most important things on the planet. I thoroughly believe learning is one of the main reasons why we exist. The first point is very logical and it is key to becoming good at anything, if you want to know chemistry, you go to the chemistry teacher right.

    Which of these lessons do you think is the most important?

    1. For me, I think the most important lesson on my financial independence journey was learning how to invest in low-cost funds. It took me a long time to really dive in and look at my investments to develop my own financial strategy, understanding the costs, the returns, and the overall risk. I think I missed out early on and unfortunately lost some of my savings through fund expenses and lower returns. However, sometimes learning the hard way can make our future that much better and help us learn faster than we would have otherwise. Thanks for your comment! ~Jen

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