Your investments: 18th birthday and financial independence
By AARON KATSMANStarting Your Own Business in Israel 526(photo credit: NEFESH B'NEFESH)
“You know you’re getting old when you get that one candle on the cake. It’s like, ‘See if you can blow this out.’” – Jerry SeinfeldSometimes my children complain that they aren’t portrayed in the brightest of lights in my columns. In fact, a few months ago my oldest daughter went to the doctor and someone in the office, who religiously reads the column, had asked her if she is the one that needs to be driven to school because she always misses the bus and ends up coming late! Needless to say my daughter made it known to me that she wasn’t overjoyed to have this be her claim to fame. Well, fast forward and it’s now her 18th birthday. It’s seems like it was just yesterday that she was a baby, and now she is all grown up. All those things that I have said over the years that she can only do when she turns 18 are now going to be a reality, and she knows it. Boy am I in trouble.While her birthday present will remain a surprise, I must admit that I was contemplating doing what Mark Rioboli, 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.’”I may be cruel but I am not that cruel.AdvertisementAlong with Independence Day, her milestone birthday is also about independence. I would like to focus on a few tips to help become financially independent.Before Passover, my daughter actually came to do some work for me. She needs money to fund a trip that she plans on taking with some friends after her high-school graduation. When it came time to pay her, I asked if I should pay her directly or treat her like an employee where she would, conceptually, have to pay tax. Oh the tax man. Welcome to adulthood!My first tip is to keep it real. Like many of you, I spent hours working the grill for a family BBQ on Yom Ha’atzma’ut. We are now in the midst of smoke season. That’s the two week’s 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. They appear to be living the good life, but 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.It’s never too early to start saving. Get into the habit of putting something into savings on the money that you earn. 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. We may have just finished up an election season where we were exposed to numerous pledges on how the government will be there for us and take care of us, but don’t believe it. 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.As you can see, establishing good financial habits at an early age can really make a huge difference for your financial future. Like many things in life, once you hit middle-age, changing habits is a very tough chore. By starting early with good habits, it will just become a natural part of your life.In a world where everything is instant, know that the key to growing wealth is in patience. You’re not going to suddenly become a millionaire. You need to realize that the good financial habits I mentioned above are the real keys to becoming financially secure. Live within your means, save and invest, and focus on a slow and steady approach to building wealth. That’s the ticket.I want to wish you a very happy birthday and you should merit a year of health and happiness, and may the Lord fulfill all your requests, for good. We are so proud of you and you should keep up the good work. Oh, and since you are now 18 and living at home, should we speak about kicking in a bit for rent!This article reflects the opinion of the author and not necessarily that of Portfolio Resources Group, Inc. or its affiliates.Aaron Katsman is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing. www.gpsinvestor.com; aaron@lighthousecapital.co.il.
