By the time you read this, I will have retired from the Times and gone off on my new venture. But I couldn't do that without leaving you with a few of my favorite tips. They're all simple, but if you take them to heart, they have the power to vastly improve your financial well-being.
No matter what you hear on television about "no money down" and the power of leverage, most people who build a nest egg do it by spending less than they make. In the early years, the amount you save is far more important than the return you earn on your investment. At any stage of life, living beneath your means reduces stress and builds financial security.
In the beginning, the reason to save is to have something to fall back on, so you don't have to pull out a credit card when the inevitable emergencies of life arise. Once you've done that, you can save for future goals, including that day when you'll no longer be working.
Think you can't save? Kimberly Cooper of St. Petersburg managed even though she spent 19 years in minimum-wage and low-income jobs.
"Stop believing what Americans tell you that you must have to live," she said. "You will still be breathing even if you don't have any furniture." She said she once lived for six months on flour, dried beans and canned fruit and vegetables. Hopefully, you won't have to resort to such drastic measures to faithfully put aside at least 10 percent of your income.
The worst money mistake younger people make is running up debt thinking it will be easy to pay off later. Usually it isn't. If you can't pay your credit card bill in full when it comes in the mail, don't charge anything else until you've paid it off. If you need student loans, don't borrow more than you're likely to earn the first year after you graduate.
The worst money mistake older people make is entrusting their life savings to smooth-talking salespeople who claim they've found the magic path to high yields with no risk. Repeat after me: If it sounds too good to be true, it probably is. I keep thinking everyone knows this, and then Lou Pearlman comes along and picks the pockets of thousands of people.
You can avoid scamsters, but you can't avoid risk. Never forget that all investments have risks and learn to manage them. You may be discounting the risks, you may have made adjustments to compensate for them or you may not know what they are. Never invest in anything unless you really understand it. If it sounds too complicated for you, it is.
Make your bets at the margins. By that, I mean put most of your money in a well-diversified portfolio that gives you well-thought-out helpings of stock mutual funds, bonds or bond mutual funds and cash. Then if you want to speculate on currencies, try your hand at stock picking or invest in your brother-in-law's great idea for a startup business, do it with a small percentage of your assets.
Have a plan for your money: a goal and a path you intend to take to get there. Then educate yourself, learn from your mistakes and open those statements.
Best wishes to all of you.