As I was chatting with my friend, Gwen*, recently, she mentioned that, financially, she’s done most everything according to the books – she has no debt, started saving early, earns a good income, and is already investing. And she’s only in her mid-20s.
Gwen is a great inspiration for millennials. She’s proving the standard path of college, debt, work, more debt, and retirement at 65 isn’t the only way. Her journey to financial independence demonstrates that if you start young, you can gain the freedom to live life on your own terms.
On the other hand, there are those of us that didn’t learn those important financial lessons early. Many of us didn’t get the money thing figured out in our early 20s. And some of us don’t figure it out until our 40s, 50s, 60s or even later.
Does that mean it’s too late?
No. No, it does not.
It’s never too late to improve your finances
15 years ago, Alan and I had a negative net worth. We decided to start taking control of our finances 10 years ago. Today, we are less than 10 years away from financial independence. We’re certainly not special in any way – we just started making changes and were consistent. Sure, we hit obstacles and back-tracked a few times, but over time, the changes added up and our lives have changed drastically – for the better.
Every step you take in the right direction will lead to less financial stress and more financial security. It doesn’t matter if you are starting to pay off debt in your 40s, 50s or later – starting on it right now will make a difference 1, 5, 10 years down the road.
You still have time to get it right, no matter how old you are. And there’s research to back that up.
The AARP and the Charles Schwab Foundation conducted a study to determine if financial education among people 50 and older would change their financial situation. And it did. Participants not only reported a significant drop in money-related stress, they set financial goals, took action and improved their finances.
Here’s what they found:
“Looking at other discrete indicators of change in financial behaviors, most significant post-training (6-month) change was found in the following “positive” behaviors:
- calculating net worth
- reducing financial fees
- reducing spending and/or increasing earnings
- prioritizing debt payment
- reviewing credit card statement
Likewise, frequency of some “negative” behaviors declined significantly 6 months post, including:
- being overdrawn
- being contacted by a collector
- taking out a payday loan”
Now is the time to improve your finances
And then do something tomorrow and the next day and the next.
You can do anything for 15 minutes, right!? Set aside 15 minutes today and get started. If you keep doing something to improve your finances 15 minutes each day, you will see results.
Here are a few ideas to get you started:
- Keep your receipts for the day (or week) and record your spending
- Check account balances
- Learn about personal finance software (for tracking spending, net worth or budgeting)
- Make a list of your debts
- Sign up for a money management class (in real life or online)
- Read 3 personal finance articles
- Make a list of all your expenses
- Eliminate an unnecessary expense
- Gather together all your bills
- Start a money binder (make a list of bills and track your spending)
- Calculate your net worth
- Set up an automatic savings transfer (and check out Digit)
- Have a money conversation with your partner
The research shows financial education changed participants’ financial behaviors and stress levels – in good ways.
If you are reading this right now, you have endless access to personal finance information. Google it, find some favorite websites and read them Every. Single. Day.
Here are some good places to start:
Your Money Toolbox from Money Boss
Free Education For All! (The best blogs on the planet!) at The Retirement Manifesto
Recommended Personal Finance Blogs from Be Net Worthy
Best Money Blogs from Rockstar Finance
Go to the library and check out books on personal finance. I recommend my favorites here.
Whatever works for you, take time each day to learn more.
If you want the ideal financial situation, you’re going to give up before you even start. You have to start somewhere, even if it’s at zero (remember we started at less than zero).
One step at a time. One dollar at a time. Your goal may seem so far off, but each step you take will bring you more security and less stress. You will be better off 3 months, 6 months and 1 year from now.
What works for other people may not work for you. And that’s okay. If you’ve been trying one type of budget for a couple of months and it’s not working, rather than try harder to make that one work, try something different. Look for other options and don’t be afraid to try something new.
Sometimes it takes a little creativity to figure out how to reach goals. Ask yourself “how” you can get what you want. There is almost always an answer (or many answers). Think outside of the box to find the solution.
You will get nowhere fast if you don’t believe you can do it. Visualize what you want. Keep negative self-talk in check. Change “I can’t” to “I can’t yet, but I will”. You can.
Focus on what you can control
You can’t control what you charged on your credit card 5 years ago, but you can find ways to lower the interest rate and make extra payments to reduce the balance.
Focus on the things you have the power to control and improve the situation. You have control over your choices, your thoughts, and your behavior right now. Take that control and get started with those first steps.
Read about personal finance every day. Send an extra $5 to your credit card balance every day. Track your spending each week. Stop buying a coffee on the way to work.
The consistency of habits adds up to big changes over time. Those “small wins” will make a difference. Each step you take will bring you more security and less stress.
Don’t dwell on what went wrong yesterday, start making it right today.
“Nobody can go back and start a new beginning, but anyone can start today and make a new ending.” -Maria Robinson
Did you get a later start? What do you think is the best thing to do to get started on improving your financial situation?
*Gwen shares her journey to Financial Independence (FI) over at Fiery Millennials. Click on over and check it out!