Financial Planning For Beginners – 12 Best Tips for Saving Money

My parents have always shared all things financial with me and my brother. We always knew, and still know, how much money they had or didn’t have at any given time.

It seemed mundane then, but now I’m reaping the benefits of that education.

Financial Backstory

My dad was a pilot for many companies most notably National Airlines, Pan Am, and United. My mom was a flight attendant for National and Pan Am. She retired after eight years and became a stay-at-home mom when I was born.

You would think that my parents had more than enough money being that my dad had a pretty good job. But….his career was plagued with strikes, furloughs, and company bankruptcies. Seniority numbers ruled his career. Circumstances and sometimes fate would just strike a blow that he had no control over.

When I was eight, Pan Am went bankrupt. Boom! My dad didn’t have a job at 49 years old. Poof went his seniority and pensions. He was a diehard pilot and was scrambling for any kind of work he could get. For a few months, he constructed shelves in a warehouse. He got just 7$ an hour but he did it anyway.

Then he heard of a flying stint in Africa. My parents were ecstatic and my dad jumped at the chance, but it meant him being away for 3 months. I cried ooooh I cried, my brother was less than a year old. He would be flying the Hajj between Nigeria, Jetta, and Saudi Arabia for 3 months. My dad flew people to their once-in-a-lifetime holy pilgrimage. The stories now are priceless and amazing. I am so glad he got to experience it.

During all of this, we lived in Miami. That’s when Hurricane Andrew decided to rip the roof and windows out of our duplex home. It was just then that my dad received a delayed call from United Airlines, looking for him. Due to United buying Pan Am’s flying routes, they wanted to conduct a courtesy interview. He had been non-contactable because Hurricane Andrew knocked out all power for several weeks.

My dad got the coveted pilot job at United. Unfortunately, he had to start again on the bottom of the seniority list, at a salary of 29,000$ a year doing what he did 25 years ago. He had left Pan Am a Captain but accepted, and appreciated, his new opportunity at United. So we picked up and moved to Denver.

Later United Airlines was going through financial hardships and the pilots were required to buy stock with 25% of their salary. No choice to be had, 25% of the salary is gone. My parents sort of relished the fact that he would have to retire at 60 years old. We would get a nice little nest egg in United Airlines stock. Well…that never happened.

As my dad turned 60 years old, United Airlines went bankrupt. Poof! went the promised stock he was forced into buying! and poof! went his pension. Lightning struck twice and my parents lost their pensions from both Pan Am and United. In the end, they lost three-quarters of their pensions as the government stepped in to manage the money.

Despite being in situations that you would normally consider ‘safe’, crazy things happen. My parents went through a lot and I had a front-row seat. At 14 I didn’t appreciate the constant stock market talk. However my parents’ openness about finances instilled a ton of great habits for me, I hope you enjoy them.

1. Open a Roth IRA

In life, only count on the money you have personally saved. Every other pot of money is beyond your control and may no longer be there when you need it. A great way to grow your money is through a Roth IRA. You can learn everything you need to know through the likes of a Brokerage company such as TD Ameritrade. Go there and read up or speak to a representative….it’s 100% free. I am by no means a financial expert and you need to get expert advice before you commit your money. TD Ameritrade has been good to me and they have been good to my family, and I trust them.

There are traditional IRA’s and ROTH IRA’s. A ROTH IRA is the way to go. Since your deposited monies have already been taxed, you can take out any money you have deposited without penalties (after a few years). All the ‘new’ money generated in your ROTH will be 100% tax-free after age 59 and 1/2. The Traditional IRA is funded by non-taxed dollars and therefore you will pay taxes on these monies when you take distributions after age 59 and 1/2. These taxes can be quite hefty as you will be taxed at the corresponding tax bracket that you fall into. I would stay away from a ‘traditional IRA’, too many taxes, too many fees, and too many stipulations.

Open a Roth now if you haven’t already done so and you will forever be thankful…I promise! Right now with TD Ameritrade you are eligible for free trades for 60 days with a new account, and up to $600.00 in cash incentives for deposits. The easiest thing you can do for yourself is open a ROTH IRA.

2. When Life Hands You Lemons… Figure Out What Else You Can Do

It’s never too late to take on a new career. My mom and dad have been married thirty-five years and my dad is fifteen years older than my mom. My mom started to panic when she realized that should she outlive my dad, she would be left pension-less and many years away from touching social security.

She told me about visions of becoming a bag lady. In the year 1999, she learned how to turn on a computer and taught herself to trade stocks. She learned on different forums and by talking to her financial advisor. Little by little, she gained knowledge and became a day trader.

She now has made enough money to pay off their home’s mortgage and has grown their nest egg despite my dad having been retired for 15-plus years.

Don’t be afraid of the unknown. There is so much information available online. Start building your knowledge now. TD Ameritrade as well as other financial institutions often host free trading seminars. MSNBC is a great channel to tune into for your stock market updates.

If somebody else can do it, then so can you. Read and continually learn and you will be rewarded for your hard work. Everyone needs a side hustle! It can be trading, blogging, or selling on Etsy! Do what interests you because there are plenty of options and lots of information.

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3. Preserve Your Money

When you are making good money always pay yourself first. It’s not about how much you make…it’s about how much you let slip through your fingers. Don’t spend everything you make. Tomorrow your world can turn upside down. You will deeply regret living high off the hog if and when the money train stops. Put away as much money as you possibly can, when you can.

4. Don’t Carry Debt

Pay off everything you can as fast as possible. Stop finding ways to waste your money. Buy a residence that you can easily afford. Pay the mortgage off as quickly as you can, and avoid paying tens of thousands in interest payments.

Be a one-car family if possible even if it’s just for a few years. Cars and their maintenance are huge expenses. Stay out of restaurants and avoid all their temptations of unhealthy food offerings. You will be spared future medical complications and skyrocketing insurance premiums.

As a recruiter who has worked for multiple Fortune 500 Companies, your credit has become an important part of the background check process. Companies are no longer accepting candidates with poor credit. As the recruiter, I am who delivers the sad news and I see it declinations based on credit more now than ever.

Be aware of your credit and debt history. Being proactive is important and there are companies like National Debt Relief that provide free estimates on debt relief. Don’t be caught unaware.

5. Don’t Buy Your Children an Overabundance of Everything

When you give children too much, you will end up dulling their sense of pride in ownership and unfortunately, this can last for their entire life. By trying to please them too much, you make it harder for them to be happy.

We’ve all been around a spoiled kid at Christmas who carelessly throws one toy aside hungry for the next wrapped gift. Don’t turn your kid into ‘that’ kid. Kids enjoy the free things in life such as family picnics and outings.

Share nature’s endorphins with your kids…you’ll all come home with a smile. And….please…leave the cell phones on your hip or in your purse. I just want to cry when I see parents on their cell phones ignoring their children.

6. Saving For Kids Future and College

If you intend to help your children with college expenses then start the day they’re born. Make an automatic weekly or monthly deposit into their college account. As we all know, school debt is a huge burden on young adults. You will feel minimal monetary hardship if you put a little away for them, consistently and early on. Instead of lavish yearly birthday gifts from the grandparents, aunts, and uncles….ask for a donation towards their college fund.

Birthdays and holidays are more fun for everyone when there isn’t all the worry and pressure of shopping involved. Of course, small gifts are a must when kids are involved, but as they get older show them their growing bank accounts and they will be excited. If you give them an allowance for chores, take a portion of it and add that to their college fund. This will teach them to pay themselves first.

My parents were the voice of reason in completing my four-year college degree. They always said that it would be up to me to use the degree or not. Completing my BA was important to me since neither of my parents had degrees. I hated school though, absolutely hated it. I floundered with degree type. In the end, all my credits pointed toward an English BA, so that’s what I got.

The degree gave me freedom. Who knew that 6 years after graduating I would stumble onto HR and need that BA? I will always appreciate my parent’s persistence with my education. Don’t forget to be that voice for your children.

I think every parent starts out wanting to help their kids with future college expenses. Life goes by quickly, and then the reality of the huge expense overwhelms you. You end up putting it out of your mind and ignoring the scary thought of it. Get off the couch and open a college account now. TD Ameritrade makes it easy, but any credit union or financial institution will be able to help grow your money. Put in just 10$ and commit to the auto deposit even if it’s just 10$ every month. A huge mental burden will be lifted from you….”Ah” now go back to the couch and continue what you were doing :0)

7. Don’t Worry About What Other People Think

Always put your family’s finances first. Other people have their financial priorities. People will try to get you to spend your money on what they want. Maybe they want you to join them on a vacation. A ten-day cruise to the Caribbean? Wow! We would have so much fun! The memories you’ll make are so worth the 5,000$ it will cost! They tell you they can’t possibly do it without you because of course you are the sole provider of fun.

What they don’t tell you is…they have lots of air miles and they will get a free flight and they just got a big bonus from work that is burning a hole in their pocket. While you….you have been diligently socking away a hundred dollars a month for years and are finally proud of your accomplishment.

Don’t let other people dictate when and how to spend your money! They selfishly are only thinking of their pleasure and they won’t be the ones feeling the pain of an empty bank account.

8. Don’t Buy Things Just Because People Shame You

I’ve had people laugh at my old car and ask me if I’m cheap. Yes, yes I am cheap, so that I can be smart. I held onto my old high school car until I could afford to buy myself a new one… for cash! It felt great to walk out of that dealership debt-free. I did not want to give them one more dime for any kind of financing and I didn’t. :0) Oh and by the way, I chose a ‘new’ demo car from the dealer…I got a nice discount on my ‘new’ car.

When it comes to your vehicle do not compromise the year or amount of miles you are comfortable with! The right car and deal is out there.

9. Don’t Ever Rely On Your Employer For Your Pension

What is given to you can easily be taken away. Lead your life as if you will not get the golden ticket that has been promised to you. These days, company bankruptcies are becoming the norm. When that happens, you lose everything you invested in the company. The company declares bankruptcy, clears out all its debt, and re-emerges as if nothing ever happened….except you are holding an empty bag. It’s super painful and hard.

Losing your pension makes you wonder how you could have been so stupid to devote your whole career to the company. It makes you bitter and sad. Everything you had envisioned your retirement to be, gone.

Large companies don’t look out for the little guy anymore. I worked very hard at a large company. One day, we had a group meeting and I asked a question about why all of us had been passed up for a promotion. The manager smiled and said out loud “You are all easily replaced and are expendable”. He thought it was a funny thing to say, but I got super hurt.

Within a week, I got up and quit that job. I was just a number at that company and it opened my eyes to what my work ethic meant. Pay off all your debt and save anything you comfortably can. Look out for yourself because no one else will.

10. Don’t Assume You’re Going to Inherit Money

My grandpa’s family owned an apartment building in New York. His grandfather always told him he would inherit it one day. Well, his grandfather died and didn’t leave a will, and the property went to my grandpa’s mom and dad. My great-grandmother died early at 45 and great-grandpa got remarried. My great-grandpa got Alzheimer and his wife sold the building and took the money along with great-grandpa to Greece. He died there shortly after and we never again heard from the stepmom. So…poof! went the inheritance.

There are too many variables in life and inheritances can easily disappear. Don’t live your life expecting an inheritance. If you inherit money, it will help you immensely but don’t make the mistake of assuming you will get it. Expecting it could make you complacent and take away your financial drive.  Again, always rely on just what you have….leave the dreams in LaLa land.

11. A Family That Works Together Plays Together

My dad was a pilot and went 4 days out of every week. My mom took care of the house, money, and all the kid responsibilities. We’d want to go places and get impatient like kids do. But my mom would say that she had a lot to do and might be too tired afterward to have fun. 

Sneaky! She suggested we help so that things would get done quicker. Tricky, tricky, she got us to help out. She would say “If all three of us finish up these chores then it won’t take Mommy a long time and Mommy won’t be too tired to go out with you”. So yes! It was a deal. We zoomed around and got everything done and off we went to have an afternoon of fun. SQUIRREL! 

Give your kids sets of responsibilities as they grow up. One day they will be adults and they will automatically have to take care of everything you once did for them.

Make it easier for them by introducing them slowly to what every adult eventually has to cope with. They will grow into happy adults that aren’t overwhelmed by mundane chores. You will do them a great service that will benefit them throughout their lives. And…their future mate and children will thank you for it!

12. Expect the Unexpected

Life is like that ‘Monopoly’ board game. You roll the dice and are forced to pick a card. ‘Do not pass go and pay 200$’ …advance to ‘Park Place’….’ Go to jail and lose a turn’ (Eeeek! Hopefully you avoid that card!) In life, you never know what is coming at you next.  Accidents, tornadoes and hurricanes, jobs, hurt feelings, crazy neighbors, politics, insurance…the list of possibilities goes on and on. Sometimes, something great happens to you and sometimes something terrible happens.

When I have something scheduled for my future, I try to put it out of my mind until I absolutely must deal with it….good or bad. Why do I do this? Because I have found that most future developments never come to fruition. I have wasted so many emotions, thoughts, and sleepless nights on ‘what was supposed to happen’ that never did. Take care of the here and now and you will automatically take care of your future.

Learn to say “no” and don’t add too much TMI as TMI gives someone ammunition to work around your ‘no’. Also, project yourself ahead of situations. “Monday I have to go to the dentist but Tuesday I will no longer have a throbbing tooth”!

Take baby steps each day as these will strengthen you. Learn from your parents, grandparents, aunts, uncles, teachers, neighbors and friends. They will give you a unique insight into what can happen in life. Their stories can’t save you from what your personal little ‘Monopoly deck of cards’ has in store for you, but you will be a bit more able to cope as you pick your cards from the deck.

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Do you take financial planning seriously? What financial hardships have you recovered from? Questions and comments are always welcome. I hope this post inspired you to start taking an active interest in your finances.

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