Over the weekend, I was thinking about some of our previous Oxford Club conferences. One that came to mind was our 2022 Private Wealth Seminar in Charleston, South Carolina.
Our hotel was located on King Street, a popular part of town near the College of Charleston. The area was teeming with a mix of college kids, other folks spending their disposable income at crowded upscale bars and restaurants, and, like in any big city, homeless people.
It was an interesting trichotomy of young adults hoping to “make it,” people who had already “made it,” and individuals who − because of either their own bad decisions or bad circumstances (or both) − did not.
When seeing those who are destitute, I often have a “there but for the grace of God go I” moment. I was lucky to be born into a stable family that nurtured me.
However, I also know for certain that I made the right choices along the way that led to my financial success.
I grew up middle-class, the son of an assistant principal and a stay-at-home mom. I had everything I ever needed and even some things I wanted. I was very fortunate.
But when I went out into the world as a young adult, I was broke. New York City is an expensive place to live, and I wasn’t making much money in my very non-Wall Street entry-level job. There were a lot of spaghetti-with-butter dinners in my hovel, which was called an “apartment” by New York realtors (and, apparently, housing officials).
My parents were good role models in that they never had any debt besides a mortgage. When it was time for me to go to college, they said they would pay for me to go to a state school. They couldn’t afford a private school and weren’t going to go into debt to pay for one.
Neither was I. (I didn’t take on any debt after college either.)
Because I had no money, I had a strong desire to make some, so I taught myself about investing. Buying stocks for the long term didn’t relieve me of my plain pasta dinners in the near term, but it did set me up for the future.
Here are the lessons I’ve learned about handling money that have served me very well in my life and that I teach my kids.
1. Avoid debt like it’s a communicable disease.
Generally speaking, I see two reasons to take on debt: to buy real estate or to start a business. Otherwise, buy the beaten-up car and drive it until you can afford a better one. Don’t go out to eat, and instead make do with what you have.
I know none of that is fun, but if you want a better, more sustainable future, you may need to take on some short-term discomfort. If you already have debt, make sacrifices to pay it down as fast as possible. The sooner you’re not paying interest to a bank, the sooner you’re investing for your future.
2. Invest in your retirement account.
This is a must. Investing in your retirement account not only helps you secure your future, but also gets you tax breaks so your taxes will be lower today. If your company has a 401(k) plan where it matches your contributions and you are not participating, you are literally saying “no thanks” to free money from your employer.
3. You’re not going to get rich quick, but you can get rich slow.
Most of us can relate to Freddie Mercury when he sang the lyrics “I want it all, and I want it now.” Being lured in by cryptocurrencies and other get-rich-quick schemes is a good way to not get rich. In fact, they’re often good ways to get poorer.
The truth is it’s not terribly difficult to get rich slow if you invest in quality stocks or index funds for the long term, but most people don’t have the patience to do that.
The market goes up over the long term, and if you’re able to put some money away each month/quarter/year and invest it, you will be way better off than if you hadn’t. It’s an easy and proven recipe for success that most people are too shortsighted to understand.
Once in a blue moon, I will still make myself a bowl of pasta with butter for dinner to remind myself of and appreciate how far I’ve come. I’ve certainly been lucky in life, but I also stuck to a plan that has worked for generations of investors.
Make the right choices for your financial future today… and teach the steady path to riches to your kids and grandkids so that they have a brighter tomorrow.
What are some of the best financial lessons you’ve learned? Drop them in the comments below.
Don’t get married
Don’t buy anything you have to feed or paint!
Practice “delayed gratification”.
Dear Marc,
I fully agree with your perspective on life.
The three points you make are very valid. I started even lower economically, but more or less followed your thinking and now I am retired. I wish I had started investing a lot earlier, I made it in life without any mentors or advice. I am an immigrant from India. Retired as an Engineer. And a director level Oxford Club member. Thanks,
Satyan
Read Marc’s book:Get Rich with Dividends.
I did, and have turned $275K into $380K over the last 3 years, and am earning an extra $50K a year in dividend payouts.
This puts a smile on my face everyday!
Don’t finance anything that depreciates.
One of the best lessons I ever saw was an S&L skit with Steve Martin, Amy Poehler and Chris Parnell. Hilarious on debt and funny as can be.
save 20% of your income, buy term and invest the difference. You will thank yourself later!
It seems like it has been repeated more often than any other phrase: Don’t invest more than you can afford to lose.
But it always makes sense.
If you can’t pay off what you charge every month then you can’t afford it.
They shod be teaching this stuff in high school.
Be like the turtle and the hare. Slow and steady and consistent like the turtle pays dividends down the track and starts the magic of wealth compounding.
I stumbled into a 401k plan after being laid off in my mid twenties and never regretted it. My contributions and the company match have grown into a nice nest egg for retirement. I use excess money from my paycheck to invest along with the Oxford club because I saw how well my retirement fund was growing but I had no idea how to pick a winning stock on my own. Thanks for all the recommendations!
The ten year old used car market. Network with persons sliding parents to assisted living. Know what you vs want as a durable long lasting vehicle (consumers reports). Mechanics know.
Thank you for this common sense message, Marc!
It’s good advice and helped me (today) to avoid wandering into unknown territory – with money in hand.
Marc,
You need to add 1) Invest in Yourself via education and continual learning and 2) Find successful rich people, get them to mentor you and learn what they did and 3) Invest in who you know as much as what you know
Thanks,
Glen
Saving (investing) a min of 10% if your take home income is almost required for long term success.