What's the best money advice you ever got? We put that question to a cross-departmental sampling of Fools. Share your own -- or let us know what you think of these -- in the comments section below.
Sara Hov: Automate!
Since receiving my first paycheck scooping ice cream at Ben & Jerry's, I've loved earning money. But what I find even more intoxicating is spending it -- sometimes (OK, often) to the detriment of my bank account. I've heard the advice to "pay yourself first" many times. I just chose to reward myself with new clothes or fancy restaurant meals rather than putting cash into savings.
A few years ago, however, a financial blogger recommended the modern-day equivalent of the old envelope system: Create multiple savings accounts (I use ING Direct), and set up automatic deposits to them each month. That way I don't have to worry about spending whatever is left in my checking account, and I don't have to feel guilty if I want to spend it on a massage -- or a trip to Vegas. The best part is, it works!
Dan Dzombak: Invest. Diversify. Dividends.
It has been shown that dividend-paying stocks outperform the market, and I've shown through my high-yield dividend portfolio that you can do this, too. While the highest dividend yields are tantalizing, the highest is currently American Capital Agency, you shouldn't be completely invested in just one sector. In my high-yield portfolio, I do own Annaly Capital
Jason Leaf: Beware easy money.
"Credit cards are the devil." That's an exact quote from my father, and it's one I vividly remember from my childhood. We were in a department store. The store clerk asked whether we would like to put the items on a new store rewards credit card that "would save us 20%." That's when my father uttered the line and, truth be told, I turned a little red with embarrassment. Fifteen years later, I still recall the lesson: Credit cards can be extremely dangerous. Making minimum payments at 18%-20% interest can flat-out jeopardize your financial future. My advice: Protect your plastic or else the Vikings from the Capital One commercial will pillage your money supply.
Vienna DeGiacomo: Make spending inconvenient.
Never save your credit card numbers on online shopping sites. Not only is it actually pretty unsafe from a hacking standpoint, but those extra 30 seconds of taking your card out of your wallet, typing in your number, and checking the CVV code might be exactly the thing to save you from 50% off $300 leather leggings. Unless you're Bon Jovi, it's not a good look -- for your thighs or your bank statement.
Raffaele Notaro: Save now. Smile later.
A lot of what my dad said sounded pretty unreasonable to my 17-year-old ears. But the idea that I should take a portion of my hard-earned cash and put it somewhere I couldn't get at it until I was 59 1/2 was flat-out crazy. I didn't grasp the advantage of tax-deferred savings, nor did I understand the magic of compounding.
I don't know how he persuaded me, but I'm lucky he did. The amount I put away from my summer jobs was insignificant, but the habit of saving it formed in me is the foundation of my financial security.
Lacey Poliakoff: The best time to start is yesterday. The second-best time is now.
Having read Peter Lynch's One Up on Wall Street I wanted my first investments to be companies that I knew and admired. When I set out to research the stocks I was most familiar with and excited about -- like Google and Apple -- the price per share left me thinking I needed to save a lot more money before I could begin. I stayed there, frustrated and stuck until I came across this Motley Fool article: How to Invest $20, $100, and $1,000 (and more).
Using Sharebuilder, I set up a DRIP-like account and an automatic payment plan. Through this program, I was able to begin buying fractions of shares. I'd finally found a way to buy stock in the companies I wanted, not just the ones I could afford.
These days, investing is a part of my life and I can say in full disclosure that I do now buy "full" shares of stock. But none of that would have ever happened without the excitement I gained from watching my portfolio grow with fractional shares. Want some good investing advice? Start now.
Brian Richards: Easy come, easy go.
For me, it was a lesson in compound interest. My dad opened a savings account for me at a credit union, made me stash some money in it (when I would've rather spent it on teenager stuff), and then showed me how my money earns interest month after month after month.
And then, not long after, he had me open up a credit card (at a time when most of the teenagers in the world used only cash), charge one or two things a month, and pay it off in full, on schedule, every month. As much as compound interest can supercharge your savings from a young age, it can destroy them just as easily.
So it's pretty simple. Compound interest can be your friend, or it can be your enemy. Choose wisely.
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