10 Texts of Money Advice

My 18-year old son asks open-ended, life advice questions via text message. These frequently do not have short answers. He recently asked if he should invest his entire life savings in the stock market. I advised against that and said we’d talk later because it’s better not to do long financial discussions via text. After further deliberation, I decided that maybe that wasn’t the case and set myself the challenge of composing ten pieces of money advice that would each fit in less than 140 characters. Here’s the result.

  • Spend (much) less than you earn. If you can’t do this, nothing else matters.
  • Don’t carry a credit card balance. Pay it off in full every month.
  • Keep at least $2,000 in an accessible savings for emergencies. If you use it, getting it back to full is the priority.
  • Avoid debt if you can. If you take out a loan or mortgage, avoid high interest rates, and pay it off as quickly as possible.
  • Save 20% of your money in a difficult to access money market account.
  • Once you have saved six month of expenses, invest in low-fee, diversified mutual funds or ETFs.
  • Invest for the long-term and don’t watch the short-term ups and downs. Don’t invest what you can’t afford to lose.
  • Max out your 401k or other retirement account contributions.
  • If you have people that depend on you, get a will and purchase term-life insurance.
  • Focus your resources on experiences and opportunities to connect with people instead of expensive things.

I should point out that I am not a fiduciary advisor and this is advice that you found on the Internet. Different situations might require different approaches. Having said that, I’ve found that these rules work for me. I’m not rich by first-world standards, but I’ve done pretty well through the last twenty years just using guidelines like these. Never underestimate the power of simple rules to solve complex problems.

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