The Ten Most Important Things I’ve Learned About Money and Life In The Last Year

A year ago today, The Simple Dollar began. At that time, I had figured out that I needed to always spend less than I make, but I still had some credit card debt and a truck loan to get rid of (on top of my other debts) and almost nothing in the bank. I also had no idea how to manage the responsibilities of a website like The Simple Dollar. Today, my only debts are student loans and a home mortgage, I’ve built The Simple Dollar into a thriving community, and I’ve got a very comfortable emergency fund and the beginnings of an investment plan.

It wasn’t easy. It took a lot of work and I spent a lot of late nights getting things in order. Here are the ten things I’ve learned over the past year from the experience of starting and building The Simple Dollar, learning how to manage my finances and my own mental traps, and build a stronger future for myself.

Time is the one thing you can’t ever get more of. There will always be opportunities to earn more money, but there will never again be an opportunity to read your son a book when he’s a toddler. Don’t let a day pass without enjoying the great things already in your life, even if it means you miss a meeting or fall a bit behind on your projects. What’s really important, after all?

Every time you spend a dollar, you sacrifice a bit of your future. If you sit around and dream about financial freedom while dumping $30 a week at the coffee shop or buying a new DVD each week or going out for $20 worth of drinks with the guys on a regular basis, you’re just tossing that dream into the gutter. Getting ahead takes commitment and sacrifice – if you want to live the dream, you have to work for it, and that work means sometimes not buying everything you want.

The simpler you make your investments, the better. I used to believe that investing was complicated. In truth, it’s scarcely more difficult than a savings account if you do it right. Just buy low-cost index funds, hold onto them for a long time, and let them do the work. When you’re ready to do something with the cash, start selling the funds. That’s it – and the online services offered by most providers of index funds, like Vanguard, make it about as easy as putting cash in a savings account.

Finding ways to better manage your time is always worthwhile, but don’t make it an obsession. I have a friend who has an elaborate time management scheme he uses. He often tells me how much time it saves him, but I regularly see him devoting significant time just to the system. For me, the core of it is that I just keep an idea notebook with me, jot down ideas when I have them, then go through them all once or twice a day. It’s simple, doesn’t take much time, and really keeps me on the ball.

Automate as much as you possibly can. I have all but two of my bills on autopilot. I have dumps into my savings accounts on autopilot. I have my investing largely on autopilot. In effect, except for irregular things, I basically don’t have to touch my personal finances, which means that I don’t have to spend much time worrying about it. One big caveat – for this to work, you need to consistently be spending less than you earn, otherwise you run into some serious overdrafting problems. Yet another reason to become financially responsible.

Find time to recharge. There are days where I just keep going without cease from before dawn to well after dusk, but if I do that too much, I start to wear down and no matter how much time I devote, I’m simply not as productive. I’ve found that taking regular time outs to do stuff that really deeply fulfills me works wonders. In fact, over a weekend, I’ve found I get more done if I spend one day doing my tasks and the other day just taking my kids to the park and reading than if I spent both days working from daylight to dusk.

The best way I’ve found to save money is to prepare all my food at home. This is an incredible money saver. It’s not too hard to prepare a meal at home that costs less than a dollar a head and contains all of the nutrients my family needs. Do that over and over again, especially compared to the prices on take-out foods, and it isn’t long before you’re saving a lot of money – and likely eating much more healthy as well.

Keep track of things. Make yourself look at your financial situation at least once a month, if not once a week. Tabulate up all your debts and assets and see whether or not you’re making progress. The numbers don’t lie – it’s a constant reality check that keeps you from living in the clouds and spending money on a whim.

Connect with as many people as you can. It’s always useful to forge connections with as many people as possible. Take the time to get to know everyone around you – your coworkers, your professional acquaintances, your neighbors, people in your church, and people who participate in community events. Get to know as many of them as you can – learn their names and some things about them, and keep in touch with them. When you know two people who could really use each other’s help, connect the two of them. Doing this and being genuine about it pays more dividends than you can even imagine.

Forget the paycheck – do what you’re passionate about. Time in and time out, I’ve seen that people will pay very well for passion – that’s the truly valuable thing on this planet. Whatever you’re passionate about, do it and the money will follow if you open the doors to it. I believe this from the bottom of my heart and I’ve reached a point where I’m passionate about everything in my life. My choices are merely determinations about which passion to follow at the moment.