I remember when the candle shop burned down. Everyone stood around singing “Happy Birthday.” – Steven Wright
I remember when the candle shop burned down. Everyone stood around singing “Happy Birthday.”
Steven Wright
Time flies. Another Independence Day is upon us. For our family, 5 Iyar has special significance, as it’s the day 22 years ago that our oldest child was born. She loves doing Israel advocacy, and after she completes her second year of midrasha, she will start university. There’s no question we’re really proud of her.
On the other hand, certain things haven’t changed in 22 years, including that she will live at home when she attends university and is financially dependent on her parents. She hates when I say that. I hope she knows I am joking when I speak about her moving out or paying us rent. Let’s just call it even. I keep my bike in her room, and she lives rent-free.
A few years ago, I wrote: While her birthday present will remain a surprise, I must admit that I was contemplating doing what Mark Rioboli, a CFP at Independence Advisors, wrote about his birthday gift to his daughter. “I recently asked my daughter, ‘Guess what you’re getting for your birthday?’ ‘A car? Jewelry? A new phone,’ she guessed excitedly. ‘Nope,’ I said, ‘estate planning documents.’ ‘Seriously Dad?’ she said. ‘Seriously,’ I said. ‘You can’t enter adulthood without the proper documents.’” Such is the life of a wealth advisor’s child. Don’t worry, I may be cruel, but I am not that cruel.
Both Independence Day and young adults starting out on their own share a similar theme – independence. I am going to give a few keys that will help put any young adult on the path to a secure financial future. The earlier you can start good money habits, the better off you will be. It’s very hard changing bad financial practices when you’ve been doing them day in and day out for 20 or 30 years.
Tips for a secure financial future
My first tip is to keep it real. Like many of you, I spend hours working the grill on Independence Day. We are now in the midst of smoke season. That’s the two weeks between the national barbecue on Independence Day through Lag Ba’omer – national bonfire day.
I have met with too many people whose financial reality is based solely on smoke and mirrors. Don’t believe their social-media posts and pictures. They appear to be living the good life, but they are really loaded up with debt and have no plan to pay it off, which means it keeps on getting worse and worse for them. The earlier in life that you can start budgeting and living within a budget, the easier it will be when you get older and your expenses ramp up.
There is a famous political saying in the US that a conservative is a liberal who was mugged the night before. Ideological youth often enter adulthood with a certain utopian economic worldview. They have the utmost faith in government and believe that government will be there and take care of us. Not. It’s incumbent on each and every one of us to take care of our own future. No one else will do it for you. Thankfully, our birthday girl has a great understanding about the benefits of freedom and the government staying out of our lives. Amazing what happens when you pay some income tax.
How can you take care of your financial future? It’s a process. Start saving. Get into the habit of putting some of the money you earn into savings. As I have written numerous times, the earlier you start saving, the more the wonder of compound interest will help you create a secure financial future.
Speaking about Independence Day in the face of adversity, Rabbi Yehuda Amital said: “It is important to remember that Independence Day occurs between... Passover and Shavuot. Clearly, for it to constitute a step in a process of redemption, it must also strive to lead to kabbalat haTorah. Yet, the reality of an incomplete redemption should act as a motivation for us to continue this process, rather than to impede our recognition of the miracles involved therein. These three aspects of the current redemption all indicate a clear message from God to His nation: ‘For the first time in 2,000 years, I am giving you the ability to control your national destiny. You, the Jews, are now responsible to make decisions of national importance, with all of the ramifications that entails.’”
Nowadays, everything is instant. If you don’t like something, just swipe it away. The key to growing wealth is patience. You’re not going to become a millionaire suddenly. That’s the antithesis to both national and individual financial independence. Developing a country takes time, and sometimes there are setbacks, but if you look back, it’s amazing how much has been accomplished here in 75 years. So, too, with individuals. Trust the process and live within your means, save, invest, and in a few years from now, when you look back, you will be amazed at just how much you have accomplished financially.
Happy birthday to both our daughter and to the State of Israel.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.
aaron@lighthousecapital.co.il
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing and is a licensed financial professional both in the US and Israel and helps people who open investment accounts in the US.