How learning three money rules taught one student how to graduate debt-free
We cover a lot of money lessons here on the blog but sometimes you come across something so simple that it changes how you think about money. Beyond all the rules of thumb, money calculators and ways to manage your finances be sure you don’t forget the three simple money rules of Give, Save and Spend.
Today’s essay is by Melanie Valdez, a student at Columbia Basin College in Nursing. While she’s learned a lot about personal finance from her parents, her message of the three money rules is a great reminder than money management can be simple.
Check out Melanie’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win our $500 personal finance scholarship, announced August 31st!
Give, Save, Spend – Three Money Rules
What my parents have taught me about personal finance has saved me from financial burden that hits so many students now days. My parents started teaching me about personal finance at a very young age. When I was younger, if I wanted a toy, I would have to buy it with my own money that I made through chores. Through these chores I was taught that making money was hard work. I was also taught how to save my money.
When I grew up and started my first job in high school, I was told that with every paycheck I should give, save, and spend. It’s these three money rules that have shaped my personal finances over the years. Giving is a two-way street. I was taught that the more you give, the more you get back.
I was also taught to save. I try to save 15% of my total gross income. So if I made $2,000 at my summer job, I should be saving $300 of it.
I was also educated to spend. Money is worthless if it’s not used for something you need or enjoy. I was introduced to the “American Dream” in school and knew that if I did what I was taught about personal finance from my parents, I would be that much closer to reaching those goals.
Money Rules get Complicated as You Get Older
As I reached college, my parents taught me about credit and how I should slowly build my credit through my very first student credit card. I used my card for gas and groceries and only those things I knew I could go and pay off right away. I had a limit on my card and I would never buy more things than I had the money for. College is now coming to an end and I have great credit all due to my parents teaching prior to college.
I am now applying for my nursing program and my parents have taught me about home ownership and loans. My parents taught me about different types of loans for different types of borrowers. I was also taught about how I need a good down payment when investing in a home. Ten to twenty percent of the cost of the home as a down payment would be ideal.
At the age of 23, I now have a Roth IRA retirement account, where I invest about twenty dollars a month. Twenty dollars is about four coffees at your local Starbucks. I set an amount I knew I would have every month. I also have great credit. I know what to do when it is time for me to buy a home. I also know how to give, save, and spend properly.
[Melanie has a great start to investing. It may not be much but even $20 a month will add up to over $68,000 by the time she’s 65 years old. Check out these 8 Stock Market Basics and Why Investing Can’t Wait!]
I am lucky to have parents who do not fall into the American standard of living, living on what you have instead of saving, and going into debt with loans. Without my parents’ knowledge I would be living from paycheck to paycheck. I would also not be able to help out my community. But most importantly, I graduated college and am about to start my nursing program debt-free. I have no student loans to pay off and I hope to continue this trend as I further my education.
I want to thank Melanie for her essay on the three money rules. Be sure to support Melanie by sharing the article through social media and check in August for the winner of the personal finance scholarship.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.