When you look back upon your life what kinds of things stand out? For me it depends upon my current context and perspective. If I’m contemplating my family I sometimes wish I had been more active in the lives of my children. I see where I could have led more effectively. But I also see the result of our focus on learning how to learn and thinking according to what is right and good according to God rather than what the world tells you. When I look at our various moves from one state to another I wish certain decisions hadn’t been made, wonder what would have been if they hadn’t and then am grateful for each one of them because of the opportunities and blessings they each afforded.
When I think about financial matters I look back at a typically ignorant kid who thought it would all come and land in his lap. This mindset represents a common attitude of our entitlement society. It wasn’t that I didn’t work hard. It wasn’t that I didn’t want a good job. I just simply had no vision for what that meant. I had no sense of direction. I had no clue regarding real investing, saving and pursuit of wealth. I just figured it was mine by right because… well, because it just was.
In recent years I’ve learned a great deal more about these matters. I’m certainly not claiming to have a grasp on it all, but I’ve come a long way. And once in a while I get to read a great article in regard to considering finances from the perspective of the young that I so wish I had been exposed to in my youth. Today I was exposed to two such articles. One is from an economics teacher, the other from one of the various newsletters we receive.
Robert P. Murphy is on faculty at the Mises University and adjunct scholar of the Mises Institute. His consulting services and blog are available here. Just last month he offered this Advice to Young People. His advice isn’t earth shattering, novel, complicated or even profound. It’s basic common sense. But, as I reflect on my early ideas regarding finances I obviously lacked such common sense. Sometimes we need to be taught common sense. So, I offer some of his thoughts here in order to help be a conduit of common sense dispersement.
Save – What an amazing idea! But in our current society it seems that there’s some noble idea that spending is virtuous and saving is selfish. Not too long ago saving was simply prudent and everyone did it. He confronts a very real problem with the contemporary disinformation that is postulated.
Incidentally, people shouldn’t feel guilty about saving more, notwithstanding the handwringing coming from mainstream economists. As I explain in my book, everybody can increase his or her standard of living through saving. In other words, it’s not the case that if Alice makes a better future for herself by saving a higher fraction of her income, then there must be some Bruce out there who is going deeper into debt and will suffer a lower standard of living in the future.
I just love his section on developing multiple sources of income. This, in many ways, is contrary to the way our culture thinks. Our great-grandfathers were farmers all their lives, our grandfathers worked for the mine or factory all their lives, our fathers have worked for someone all their lives and now we… uh, well, most of us change jobs a lot. We’ve seen our fathers struggle with their jobs, get cut due to downsizing and in some cases have their secure retirement stripped away because of budget cuts. So we watch and wonder what to do.
This section of his treatment encouraged young people to diversify and strive to be an entrepreneur. Working for someone else is good. He’s not saying not to. He’s saying that placing all your eggs in one basket may not be the best course of action. Company loyalty is rarely reciprocated today, so be aware and be thinking about your future. Also, strive to be a productive member of society. Find something you like to do and/or are good at, find people who need it and then sell it to those people. The key to entrepreneurial success is meeting needs.
Get rid of your televisions. Wow! Isn’t that an amazing concept? If you HAVE to watch something then use your computer. The TV is a time sucking machine.
Keep at least a month’s worth of cash on hand. We never know what will happen, so it’s best to be prepared. Don’t fall into the trap of living paycheck to paycheck. Live well within your means, save and set aside at least a month’s worth of income for more flexibility, calamity cushion and emergency fund.
Help others financially. For some of this we’re talking about supporting your church. Doing so gives us focus. It helps us to think of others rather than just ourselves. But it also helps us make sure to be responsible with our finances so that we can give accordingly. So, be generous, but do so with prudence and wisdom.
Have no variable rate debt. I would propose that this isn’t enough. Rather, have no debt. Debt is slavery. This is where the other article I read comes to the fore. Tom Dyson has been mentioned here before. Here’s what he says about this.
Debt is expensive. If you abuse it, it will destroy you. Like the entitlement mentality, debt is an enslaver. It robs you of your independence. I avoid debt in my personal life… and when I’m choosing investments.
Tom then goes on to offer another piece of advice. In investing consider the strength of compound interest. It works against you when you’re in debt. But when it’s in the form of an investment it’s a powerful means to increase your holdings. Here’s his example.
Let’s say, for example, you have $100 earning 10% annual interest. At the end of a year, you’ll have $110. During the second year, you’ll earn interest on $110 instead of $100. In the third year, you’ll earn interest on $121… and so on. This is the power of compound interest. The numbers get enormous over time, simply because you’re earning interest on your interest.
Robert Murphy also encouraged young people to collect bullion coins, specifically recognizable silver coins. These are known to hold 90% silver and are easy to exchange because of their small denominations. As we’ve discussed before, silver and gold are true money, so accumulate them as you’re able (yes, that was advice, we slipped).
These thoughts easily transfer to our consideration regarding our relationship with God. We so often are consumed with what’s happening now, or even in this world, without considering our eternity. It’s easy to neglect this in a world that often denies that there even is an eternity. But, in light of the reality of eternity, is it more important to secure our temporal condition or our eternal condition? Do we focus primarily on our status in the world or our status with God? How can this little blip of a life, generally a mere 75 years, compare to infinity? We’ll study and study and study in order to improve our daily lives without giving hardly a thought to our eternal lives. It’s not that the information isn’t available. It’s that, just as I was 25 years ago, our vision is too myopic. With these thoughts in mind, let us encourage you to know the eternal God. He had revealed himself in the Bible. It’s not a tough read, but certainly is a neglected one.
Another author that I greatly admire wrote on this over a century ago. Charles Haddon Spurgeon wrote A Good Start in order to help young people think about their lives. I’ll close with a quote from this excellent book.
It is a great fact that though life to the young man, when viewed in the prospect, appears to be long, to the old man it is ever short; and to all men life is really but a brief period. Human life is not long. Compare it with the existence of some animals and trees, and how short is human life! Compare it with the ages of the universe, and it becomes a span; and especially measure it by eternity, and how little does life appear! It sinks like one small drop into the ocean, and becomes as insignificant as one tiny grain of sand upon the sea-shore. Life is swift. If you would picture life you must turn to the Bible… (p. 265)