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The Best Advice I Ever Got: 40 Great Money Tips
Monday, 11th August 2008 (by J.D.)This article is about Basics, Hints and Tips, Odds and Ends
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CNNMoney has posted a gallery of money tips from 40 “great minds”, ranging from Derek Jeter to Tim Ferriss to Burton Malkiel. Each participant provided an anecdote about the best piece of financial advice they ever received.
I’ve listed some of the highlights below. Remember: this is the best advice given to these people. It’s the financial advice they feel has made the biggest difference in their lives.
- Dean Kamen, Segway inventor: “Find work in something you love and it won’t feel like work.”
- Derek Jeter, New York Yankees shortstop: “Always know where your money is. Even if you have someone who handles your finances for you, you should be involved in the process.”
- Whitney Tilson, manager of T2 Partners LLC: “Read all of Warren Buffett’s Berkshire-Hathaway shareholder letters. That’s all you need to know.”
- Meir Statman, professor of finance at Santa Clara University: “Use money well, but do not waste it.” Be frugal but not stingy. Money is there to do good things.
- Elizabeth Gilbert, author of Eat, Pray Love: “Borrowing money is like wetting your bed in the middle of the night. At first all you feel is warmth and release. But very, very quickly comes the awful, cold discomfort of reality.”
- Craig Newmark, founder of Craigslist: “Material stuff won’t make you happy.”
- John Bogle, founder of The Vanguard Group: “Whoever cultivates the Golden Mean avoids both the poverty of a hovel and the envy of a palace.” In other words, seek the middle ground.
- Olivia S. Mitchell, director for the Boettner Center for Pensions and Retirement Research: “Save your money first and get used to living on what’s left over.”
- Steven Levitt, co-author of Freakonomics: “Don’t save too much.” Take advantage of consumption smoothing. (I’m still not sure I agree with this advice; it relies too much on predicting the future.)
Finally, Bill Nygren, manager of the Oakmark Select Fund, shared what might be my favorite story:
Back when I was in college, I remember watching Johnny Carson interview Andrew Tobias, who was giving personal financial advice. Johnny asked: “What’s the best investment for someone who has only $1,000?” Mr. Tobias said, “Nonperishable consumer staples.”
Of course, the audience roared. But Mr. Tobias was being serious and said that if you purchase nonperishables when they are on sale, the return on investment is enormous. That answer focused me on the idea that investing wasn’t only about stocks and bonds but rather was a mind-set for making sense of all of the transactions a consumer engaged in.
I’ve been trying to decide what is the best piece of personal finance I ever received. More and more, I think it’s, “Nobody cares more about your finances than you do. If you don’t take care of them, nobody’s going to take care of them for you.” It was only when I realized this that I was able to turn things around, get out of debt, and begin building wealth.
But I like “borrowing money is like wetting your bed”, too.
[CNNMoney: The smartest advice I ever got, photo by Brian Scott]
28 Responses to “The Best Advice I Ever Got: 40 Great Money Tips”
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August 11th, 2008 at 5:18 am
I *love* the bed wetting analogy. All good tips though.
“What’s the best investment for someone who has only $1,000?”
I was thinking about a similar question recently: What would I do I was given £1000. I’d certainly not spend any of it at all. Debt repayment and/or savings are the only way to do.
August 11th, 2008 at 5:55 am
I too found the bed wetting quote to be my favorite. I think that analogy really communicates well the pain of too much debt.
August 11th, 2008 at 6:15 am
I like your statement.
“Nobody cares more about your finances then you do…”
To take control of your debt and start building your wealth must have felt great.
I wish more people would do this.
August 11th, 2008 at 6:18 am
The best advice I got that I had maybe heard or seen before but did not click until I read the book the “Wealthy Barber” and that was “pay yourself first”.
Basically the same tip as said by Olivia Mitchell above “Save your money first and get used to living on what’s left over.”
August 11th, 2008 at 6:21 am
“Nobody cares more about your finances than you do. If you don’t take care of them, nobody’s going to take care of them for you.”
Definitely words to live by!
August 11th, 2008 at 6:32 am
Here’s some more to consider: “100 Quotes about Money” at http://shanelyang.com/2008/06/30/100-money-quotes/
August 11th, 2008 at 6:43 am
Those one or two pages of Dave Ramsey’s Financial Peace illustrating the power of compounded interest would be the most important advice I ever got about money. Too bad I learned it way later than I should’ve!
August 11th, 2008 at 7:37 am
I like - you’re the only one who can do it. Said to me after I was complaining about how I wish someone else would manage my life. It’s around then that I realized I needed to get my life together cuz no one was going to.
August 11th, 2008 at 8:11 am
I don’t see exactly how consumption smoothing is trying to predict the future. We can all agree that over-spending is dangerous, right?
Over-saving is just much less likely to happen in today’s society… so perhaps it seems silly to even mention that it could happen, because then some people who are already over-spending will misinterpret and think they’re over-saving… and get themselves into more trouble.
August 11th, 2008 at 8:38 am
I definitely think that the first piece of advice is key. If you love what you do, than you are getting paid to have fun. I personally have a lower paying job because I enjoy it. If we spend 40+ hours per week doing something we hate, then we are wasting our life away. If we spend that time doing something we love, then life will be more enjoyable.
August 11th, 2008 at 8:53 am
Ha!! Apparently, Andrew Tobias and my father must have been of the same mindset. My father was always a proponent of investing in…toilet paper. Growing up, our family of three had rolls of TP stuffed into every available cupboard. When asked why, his answer was always the same: “If things get bad enough, we can eat it.” At a very young age, I took him literally and was completely grossed out. As I got older, he went into more detail…his reasoning was that if the economy got bad enough (he’s always had an eye out for total worldwide economic collapse) clean rolls of toilet paper could be used as currency.
While I focus more on emergency funds, debt reduction and retirement planning, there’s still a part of me that heeds my father’s teachings and keeps the TP supply in our house full up…just in case.
August 11th, 2008 at 9:10 am
The best financial “advice” has nothing to do with money or financial matters at all. Money is a tool — it is a means to an end, which is not (and should not be) a monetary one.
If knowledge is power, then self-knowledge is self-power. Personally, philosophy gives me the balance and introspection required to be successful in all areas of life — not just finance.
If you study Warren Buffet, George Soros, Bill Miller, or any of the greatest investors in modern history, they all have studied or have emulated philosophical thought…
If I were to choose one quote to live life (and for successful finance) this would be it:
“Moderation, which consists in indifference about little things, and in a prudent and well-proportioned zeal about things of importance, can proceed from nothing but true knowledge, which has its foundation in self-acquaintance.” ~ Plato
August 11th, 2008 at 9:41 am
i like the line, “money is there to do good things.” recalls the idea that, while money issues can bring out the worst parts of some people, that same cash in the right hands can do a wealth of good, both for that person, and for others, especially as poverty continues to remain prevalent.
August 11th, 2008 at 9:53 am
I like “save your money first and get used to living on the rest”. this all you need to know.
August 11th, 2008 at 11:58 am
I know it is said to often, but Dean Kaman is right. We only get one life, and it shouldn’t be wasted doing something you don’t enjoy!
August 11th, 2008 at 12:20 pm
This was a great article. I think the best advice I got was from my high school Calculus teacher. One day, he just said, “Put your books under your desk. We aren’t learning about Calculus today. When was the last time any of you thought about compound interest?”
I don’t remember the specifics about the rest of the class. I might have already knew everything as I’ve always been financial minded. However, that class really stuck with me. I wish more teachers were like him.
August 11th, 2008 at 1:59 pm
Oooh, I have the stocking up on non-perishable consumer goods thing down to a science. Maybe I’m not such a dolt when it comes to investing!!
August 11th, 2008 at 2:19 pm
The best piece of actual advice that I’ve been given was from my mother. She said that credit cards are fine, as long as you always pay off the bill in full.
I think it’s the general attitude that companies aren’t looking out for your best interests, but that doesn’t matter as long as you do what’s sensible.
August 11th, 2008 at 7:15 pm
Good sayings. I have to agree with the nonperishables too… I have found that buying bulk of household durables when they are on the deepest sale you can find ends up saving a lot of money in the long run.
August 11th, 2008 at 10:40 pm
Johnny asked: “What’s the best investment for someone who has only $1,000?” Mr. Tobias said, “Nonperishable consumer staples.”
That reminds me of a story Howard Ruff tells about attending a conference years ago with a number of noted hard money advisers.
He got up to speak in front of 800 people and asked,”Do you honestly believe that in a period of monetary collapse that you will be able to safely drive down to your supermarket in your gas-guzzling car, make a selection from a dazzling variety of goods on the shelf, pay them with your personal check, walk safely out the door to your car, drive home and put them in your dependable, electric-operated refrigerator?”
He said that was the first time he ever got an ovation for a question! (Then he was able to give his advice about storing a year’s worth of food.)
But if I had to choose the overall best piece of financial advice I’d probably go with “Pay yourself first.”
August 12th, 2008 at 4:49 am
I like the simple, but deadly effective phrase, “Debt is slavery.” I know it’s the title of a book, but I could’ve sworn I first learned it on this site.
August 12th, 2008 at 8:07 am
Best advice here:
“Money is a tool — it is a means to an end, which is not (and should not be) a monetary one.”
Worst advice:
“Debt is slavery.”
Debt is liberating when used properly. Debt is “slavery” only if it was used to buy things you no longer want or need. Its really how people spent the money that they regret, not where they got it. Debt is just a nagging reminder of the money wasted.
August 12th, 2008 at 10:51 am
Never loan money. If you do loan money never expect to get it back. if you don’t get it back there will be no dissappointment and if you do get it back it will be an exciting and wondeful experience. if you do loan money to friends or relatives always ask when it will be repaid and what are the consequences if it is not. put it in writing and have them sign. I have never had a loan not be repaid when it was made clear when it was to be repaid. I have never had a lon repaid when there was no agreement on how or when it would be repaid.
Never fight with friends or family over small amounts if you want to keep them friends. never fight over very large amounts either, as that is what the lawyers are for.
tell your children about the power of compound interest and how they can be millionaires by investing early and watch them ignore your advise and have them tell their children after they learn you were right too late as you did.
If it looks too good to be true it is. and 2 and 2 make 4.
Look at the numbers before investing, sometimes we spend more time on choosing tomatoes in the store than making investment decisions.
Choose your spouse carefully as they will be the costliest investment you will make. Find an excersize program you like and can continue and is not dependent on equipment or a gym and make it a habit. Daily excersize will over time improve your health and living more than any amount of money.. Don’t hold grudges as they waste time and time is money. Before you go to bed each night write down in your pocket notebook the things you want to do tomorrow and number them. when you wake up start with the first one and keep working on them one by one. This will keep you focused. Cultivate friends as if you have enough friends you won’t need as much money.
August 12th, 2008 at 7:24 pm
All great advice.
The best I ever got was from my first boss. He told me to use half of every raise towards investments. Every raise I get, 25% goes to my 401k, 12.5% goes to my emergency savings fund, and 12.5% goes to an IRA or savings account to buy stock.
I asked him about inflation… He said, “When that catches up with you, quit buying coffee and switch to basic cable.”
August 13th, 2008 at 2:01 am
the only problem with most financial advice is it seems to more often than not assume you already have or at least have access to money! how about a little something for a guy who’s earning half of minimum wage who’s fighting to stay out of debt?!i think theres alot of people who have focused on getting those who have been irrisponsible with their money with reasonably paying jobs out of their debt but no one helping low payed people STAY out of debt and build up their wealth. otherwise thanks so much for all the advice!! some of it has really helped me start tracking what and where i spend
August 13th, 2008 at 8:28 am
Thanks for sharing that list! I too loved Gilbert’s bedwetting analogy, but Statman’s (and your explanation) also had a good ring for me. Most people have a love-hate mentality with money; love to spend it, but hate the bills and the debt. It offers a new healthy perspective: money, when used well, does good things. After all, you cant take it with you when you die–so use it to help you live a simple, good and decent life.
August 13th, 2008 at 10:45 am
How about the sage financial advice (sarcasm) of: “You need money to make money.” (preferably OTM, other people’s money).
What a bunch of crap!
August 16th, 2008 at 6:09 pm
When I was about 20 years old reading Money magazine to teach myself what to do with the paycheck from my first real job, I came across the compounding interest chart. It was then I realized the simple mantra that I have lived by ever since, that keeps me both balanced enjoying the “now”, and striving hard for the future:
“Work to be retired for more years than you worked.”