What I Wish I Knew at 18

Here Today, Gone Tomorrow? Learn to Analyze Your Spending

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When it comes to “budgeting,” many find it right up there with dieting and root canals in terms of the pleasure factor. However, tracking your spending and disciplining yourself to live within your means and save for the future is definitely worth the effort. If budgeting is not a natural bent for you, don’t give up on the idea altogether. You just need a willing attitude and some good resources to help you stay disciplined and on track with your finances.

How do you stay on top of your financial game?

The basic report you should complete (on at least a quarterly basis) is a cash flow statement. This report tallies your income and expenses in several key categories. It’s the surest way to see whether you’re living within your means and where your spending may be excessive. After subtracting all of your expenses from your income, you’ll see whether your net cash flow for that period is positive or negative. Remember, the goal is positive, positive, positive!

There are many online tools to help analyze your cash flow  (e.g., www.quicken.com and www.mint.com). In the past, analyzing cash flow was a lot more work—you had to save your receipts and organize them manually. But nowadays, if you use a debit card and checks for your purchases and bills, and you link your bank account to your online budgeting program, it will automatically categorize your spending and indicate where your money is going. It will even send you an email in the middle of a month to let you know if you’re over budget in a particular category (it knows if you’ve been bad or good)!

Even if it’s just a 75-cent daily newspaper or a $3 latte as you head to work each morning, make sure you account for every single dollar you spend. That’s how you can see exactly where your money is going. You may be surprised when you look at your spending after even just a couple of weeks. The nickels and dimes add up!

Analyzing spending and developing budgets are great skills to develop in the young people in your life. For young adults just starting out, tracking their spending will help determine how much they can afford for rent/housing and a car, significant expenses each month. How much should average living expenses cost? The following are typical expenditure categories and the rough percentages each should represent:

  • Housing/rent (includes utilities)    30-35%
  • Household/personal items                     20
  • Autos/transportation                              10
  • Charitable giving                                      10
  • Savings and investments                        10+ (not an expenditure per se)
  • Entertainment and leisure                       7
  • Debt/loans                                                  5
  • Insurance                                                    5
  • Miscellaneous                                             3

While the above percentages are ballpark figures (and they do change through life),  spending more than five percent above these levels is getting “up there,” with the exception of savings and investments and loans for new college grads. It’s also important to reflect periodic expenses like gifts and vacations in a budget. Holiday spending tends to spike in December, as does vacation spending in the summer. Therefore, it pays to update statements on a monthly or quarterly basis to avoid underestimating expenses. Compare actual spending to these ballpark figures, and you’ll have a good sense of whether you’re overspending in particular categories. And, take special precautions against buying too much house or car—these fixed expenses get many people in trouble.

Wise financial planning requires knowing where your money goes. You’ll make better financial choices, build a stronger credit rating, and develop good savings habits that help build wealth.

Do you track and analyze your spending?  How do you do it?  Have you trained and modeled this to the young adults in your life and, if so, how? We’d love to hear your insight and experiences!

 

Be the Only You

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“Progress” can often be a two steps forward and one step backward proposition. The technological advances of the last two decades are a good case in point. We are so much more efficient and productive (albeit more distracted!) and, in many ways, connected. The access we have to information boggles my mind compared to what it was a mere 15 years ago.

This progress, however, has come at a cost. For one, our lives are not as private as they used to be. In some cases, it’s the result of information or images that wind up in places we didn’t expect (the most egregious example being “racey” photos). In other cases, identities are stolen and manipulated by shady characters. In this latter case, others can literally pretending to be you. This is real and no laughing matter.

Do you and your family know how to protect yourselves?

Identity theft is when an imposter uses your personal information without your permission. It’s a crime and can cause untold problems for the victim. Generally speaking, it’s caused by lost or stolen credit cards, careless disposal of investment/banking statements, providing personal information (Social Security Number and PINs) where you shouldn’t, and various viral and malware attacks. The perpetrator may open credit cards and accounts in your name, forge your signature, and even obtain a driver’s license in your name.

There is an ever-growing list of ways to avoid identity theft. Some of the key ones are:

  • Shredding your financial documents after their use
  • Keeping PINs (for debit cards) and passwords in a safe, private place and changing your passwords regularly
  • NEVER sharing your banking information, passwords, or PINs with anyone (an especially good reminder for young people, who are often used to  “sharing ” everything, to the point of too much!)
  • Signing credit cards immediately and destroying outdated ones promptly
  • Not keeping your Social Security Card in your wallet or purse
  • Not disclosing your Social Security Number unless it is absolutely required
  • Calling your financial institutions and credit card providers immediately if your wallet or purse is stolen
  • Never taking phone solicitations that seek your Social Security Number and never emailing your Social Security Number or PINs to anyone.
  • Only opening email attachments when you are certain as to their safety
  • Treating your personal information as personal and private!
  • Being extremely wary of phone solicitations. If offers sound too good to be true or the sales party is aggressive, steer clear! Personally, I just avoid solicitors altogether. Period.
  • Report suspicious behavior immediately
  • Use the best anti-virus and anti-malware software for your computers

Finally, there will be situations when you simply don’t know if it’s a safe bet. Here, you should consult with trusted people in the know before releasing any information that is private. Always err on the conservative.              

How careful are you with your personal, financial, and computer information? Have you discussed this with the young adults in your life—your children, students, or young adults you mentor? Share your tips and stories with us by commenting below; we’d love to hear from you!

Build and Maintain a Good Credit Rating

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January is National Financial Wellness Month. It’s a great opportunity to do some assessing of our financial well being. It’s also an opportunity to think about how well we’re modeling and training the young people in our lives—our children, students, mentees, etc.

Here’s a good example. Can we be trusted to repay a debt? I hope the answer is a resounding “Yes!”

That’s what we want lending institutions to answer when we apply for a loan or home mortgage. They’re making a bet on us to repay our loans with interest on time, all the time. But, in order for them to conclude that we’re worth the risk, they’ll need to analyze our financial condition. In that evaluation process, one of the key measures they consider is our credit rating. It’s their way of getting independent advice on our creditworthiness.

Most young adults don’t think about this when they’re starting out, but it’s an important principle to instill at a young age—and to be reminded of throughout life. Do you know what it takes to have a good credit rating?

The most commonly used credit measure is your FICO score. Scores from 680-850 are considered good by lenders. Your keys to a favorable credit rating include:

  • Modest debt relative to your assets and income
  • Reputation for paying your bills fully and on time
  • Making regular deposits into your savings and investment accounts
  • Having a modest number of credit cards and preferably with low or zero outstanding balances
  • Paying off debt rather than replacing it with other debt
  • Not bouncing checks
  • Having a positive and growing net worth

When you have a good credit rating, you’ll receive better access to loans, larger available credit lines, and lower interest rates. It also affects your insurance rates and whether or not a landlord wants to take a risk on leasing a house or apartment to you. That’s why achieving a favorable credit rating should be a priority.

What if your credit rating isn’t so hot? You can turn it around. The sooner you start building—or repairing and RE-building, the better. It generally takes seven years for negative items to drop off your credit reports.

One thing to note if you are rebuilding your credit is that simply closing your revolving accounts to improve your credit score won’t necessarily work.  Closing credit accounts not only lowers the number of open revolving accounts (which generally will improve credit scores), but also decreases the total amount of available credit. That results in a higher “utilization rate,” also called the balance-to-limit ratio, which will actually lower your credit score! So, though it seems counter intuitive, just closing accounts is not the answer; rather, you want to pay them off and then wait patiently. When repairing bad credit, TIME is one of your greatest allies, along with PATIENCE and PRUDENCE.

How would a financial institution assess you as a credit risk? If the answer is “good,” then well done! If the answer is “not good,” what are the primary drivers? What specific steps can you take today that will turn it around?

Focus on the Things that Matter

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There sure is a lot of hustle and bustle this time year, isn’t there? Holiday shopping, holiday plans, holiday travel, holiday parties… It’s all too easy to get caught up in the activity and miss out on the things that really matter.

There will always be times in life when we feel like the rope in a tug of war, and it’s not just at Christmas. Often, when this happens, there are two formidable competitors pulling us in opposite directions. On one end are the key people in our lives with whom we have relationships. They want (and deserve) our time and attention, as well as an opportunity to grow with us. On the other end is one tough opponent—the “big three,” namely status, career, and wealth and everything that flows from that. Like most things, these are fine in moderation, but taken to an extreme (as they often are), they can destroy relationships. They can easily consume our time and energy and divert us from our priorities and core values if we’re not careful.

During the past few decades, we’ve witnessed a cultural shift toward accumulating things, rather than emphasizing in-depth relationships. You see it everywhere, especially with retailers and credit card companies that are out to get our last nickel (especially during calendar-shortened holiday seasons!). It’s found in massive consumer debt when people overspend on status-conscious items and live beyond their means. And, you see it in people consumed by their careers and in those increasingly invasive businesses demanding their employees respond to evening emails.

This holiday season, I hope you’ll remember that truly successful people recognize how important they are to others and how important others are to them. Relationships are enduring—things are not. Let’s strive to always reflect this in our priorities and in how we spend our time. We can never get back the time we didn’t spend with our loved ones. That’s a life regret we never want to bear!

Let today, this week, this holiday season, be a time of special focus and renewed commitment to the things that really matter. Merry Christmas, all!

How are you spending the bulk of your time and energy? Are you focusing enough on areas that build stronger relationships with family and friends? Or, are you allowing other things to dominate your priorities? We invite you to share your thoughts and suggestions with us commenting; we’d love to hear from you!

 

Celebrate the Season!

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It’s been a great year for LifeSmart Publishing and What I Wish I Knew at 18! We are filled with gratitude for the many friends we made in 2012—not just around the country, but around the world!
 
 

With the holiday season rolling around again,

we think it’s time to CELEBRATE!

 
 
Our 2nd annual Cyberale is offering our What I Wish I Knew at 18 book and guides at substantial savings, just in time for holiday gift-giving and classroom orders for the New Year: 

 

What I Wish I Knew at 18 BOOK – $10.99

What I Wish I Knew at 18 STANDARD STUDENT GUIDE – $11.99

What I Wish I Knew at 18 CHRISTIAN STUDENT GUIDE – $11.99

Kit containing 1 book and 1 guide – $21.99

 

now through December 31st
 

Order at AtlasBooks.com or 1-800-Booklog

 

and use the coupon code CHEER

 
What I Wish I Knew at 18 serves a wonderful gift or stocking stuffer for:

 

It’s our way of saying “Thanks!” for your support—

and to wish you a joy-filled Thanksgiving, Christmas, and holiday season!

 
Cheers and Blessings!
 
Your LifeSmart Team
 

Don’t Wait to Change the World!

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Not long ago, I spent a day with high school students at a prestigious prep school. It was technically a “day off” on the school calendar, but over 150 courageous students showed up for this special program focused on tackling difficult life issues. The stories in my group ran the gamut, but they mostly involved a lack of parental love, excessive pressure to perform (coming from parents), and the drive to be popular (with peers). It was gut wrenching at times. 
 
          What struck me about this experience was: 1) the willingness and transparency of the students to admit need and be open to the wisdom of the adult mentors, and 2) the humility and commitment of the adults to also be transparent and real, and to invest their time and energy in our younger generation. This was but one small opportunity in a field of millions, and I felt honored to serve.
 
          All around us there are people and causes that would benefit from our time, our energy, our input, our investment. Are you paying attention to the ones that would benefit from you? In What I Wish I Knew at 18, I encourage my readers to take some time to evaluate what  “causes” inspire them and provide some guidelines for discovering what those are. You can also find those guidelines in my recent blog, “Know Your Purpose, Live Your Passion.” 
 
            Which opportunities will you take today to invest in others and help make life a little (or a lot!) better for someone else? Strike while the iron is hot and build a living legacy. Someone out there needs exactly you!



            Don’t wait to change the world!     
 

What are some examples in your life where you experienced pure joy and fulfillment? Or, where you had a significant impact on something or someone? Share your thoughts and experiences by commenting below; we’d love to know how YOU’RE changing the world!
 

Don’t Define Success by Riches

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What does success mean to you?
 
Over the last couple of weeks, we’ve talked about purpose and significance. So, let’s say you do discover your “life purpose.” How will you know you’ve achieved it—by how much money you make? By the status symbols you’ve acquired or a particular title you’ve earned?
 
Really, how will you know when you’ve achieved “success” in your lifetime?
 
Our culture tends to define success in terms of wealth, possessions, and power. We’re bombarded by “get rich quick” schemes and star glamour. Forget the fact that some of history’s most miserable people have amassed great fortunes; WEALTH is easily the most common barometer of success.
 

Don’t believe it. Money does not buy happiness.

 
Consider the following quote first penned in the Lincoln Sentinel on November 30, 1905 by Bessie Stanley:
“He has achieved success who has lived well, laughed often and loved much; who has gained the respect of intelligent men and the love of little children; who has filled his niche and accomplished his task; who has left the world better than he found it, whether by an improved poppy, a perfect poem, or a rescued soul; who has never lacked appreciation of earth’s beauty or failed to express it; who has always looked for the best in others and given them the best he had; whose life was an inspiration; whose memory a benediction.”
 
Rather than basing your definition of success on monetary wealth, consider a more comprehensive definition, including how you applied your gifts to the betterment of others, the quality of your relationships with others, and the strength of your character. If you focus on these elements, rather than on wealth, power, and possessions, you’ll be much more likely to fulfill your life purpose and feel a genuine sense of satisfaction and success.
 
Whom do you consider to be the most successful people and why? Looking ahead, how will you define success in your life? Share this blog with the young adults in your life and ask them these questions; they make for great conversations! Then comment below and share your experiences and ideas with our online community; we’d love to hear from you!

We All Need to Know We Matter

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Last week we talked about how a defining purpose inspires a life of passion. Unfortunately, for some, that’s easier said than done.
 
Take teenagers who receive no expressions of love or healthy modeling from home: it doesn’t take long for that deficit to show up in academics, motivation, and demeanor. In acts of desperation, they join gangs or get pregnant or drop out of school. It’s a tragic cycle that has become all too common, with one unhappy ending after another.
 
During the past year, I’ve had many opportunities to speak with teens and young adults who are, in one form or another, facing a crisis of relevance. They see school as irrelevant, and worse yet, themselves as irrelevant. Some of their questions:
 

  • “What am I worth when my parents never tell me they love me?”
  • “What’s the point of staying in school? I’ll never use this stuff anyway.”
  • “What can I do to convince my father to let me live my dream?”
  • “I’m not that smart in academics. Can I still become a great leader?”

 
These conversations can be heart wrenching. But, interestingly, these are the kids who are most engaged in my talks on leadership! They ask the most questions and ask to share in private. They’re searching—for hope, relevance, and worth—even though it may not appear that way on the surface.
 
We’ve got to give it to them. All of them! Until young people see the relevance and value of their lives, there’s simply no way they’ll reach their full potential.
 
Here are some ways adults can help:

  • Recognize that no one (especially a young person) has a complete and accurate perspective on all he or she has to offer—whether character qualities or skills. They need the perspectives of others who can offer a more complete picture of their worth.
  • Parents can ensure each of their children understands his or her unique value, and avoid showing favoritism toward siblings through words or attention.
  • Educators can offer opportunities for skills/aptitude assessments and programs where friends, relatives, and mentors honor each student with expressions of value. For example, some innovative schools hold special retreats where students receive letters collected from important people in their lives—life changing keepsake experiences.
  • Look for opportunities to “speak life” into young people and encourage them to do the same.

 
Remember, relevance breeds hope and hope breeds motivation and direction. It’s a vital gift to give the young people in your life. Give generously.
 
Are you aware of the need for the young people around you to feel a sense of significance–and how much it means to to their ability to succeed in life? In what ways do you “speak life” into them, to make a difference that can last a lifetime? “Share” this blog with a friend, and let us know your thoughts and suggestions by commenting below!
 
 

Know Your Purpose, Live Your Passion

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“Great minds have purposes; others have wishes.”

Washington Irving

 

Your life purpose is an incredibly powerful force that will direct your life and determine your legacy. Find a successful person who is content and fulfilled, and you’ll likely find a life guided by an inspired purpose or mission, and a person who has applied his or her God-given talents to a worthy cause.

 

In fact, without a strong sense of life purpose, even the most successful accomplishments can seem empty.

 
Knowing your life purpose–what makes you tick, what motivates you, what you are alive on earth to do–is what ignites passion. Passion inspires initiative and creativity. It builds momentum and creates enthusiasm. It also sustains hope and perseverance in difficult times, and provides a reason (and enthusiasm!) for getting out of bed every morning.
 
Life purposes can be cause-driven (e.g., curing a disease, educating disadvantaged youth, sheltering the homeless, cleaning the planet, protecting our country) or skill-driven (e.g., athletes, artists, mathematicians, designers). They also can evolve throughout your lifetime.
 
How can you discover your life purpose? Here are some questions to consider:

  • What causes (e.g., global or community needs, people, situations, organizations) am I most passionate about? What problems would I most like to solve? What needs or people tug at my heart?
  • What inspires me the most?
  • What brings me the greatest joy and fulfillment?
  • Whose lives would I most like to emulate and why?
  • What are my special gifts and talents?
  • Where can my skills have the greatest potential impact?

 
Once you ponder these questions, see if a picture emerges. Then, as that picture solidifies into an identifiable sense of purpose, calling, and passion, start thinking about how you can live it out.
 
Whatever you do, don’t set your life purpose on a shelf and forget about it. You are a unique individual with gifts, talents, and perspective only YOU can give to the world.  No amount of money, fame, or accomplishment can ever compete with that.
 
Someday, you’ll want to be able to look back on your life and say, “Mission accomplished!” What’s your mission? Are you living it out with purpose and passion?
 
 If you’re a parent or teacher, find out what the young adults in your life think about their life purpose. Share your comments below; we’d love to hear from you!
 

Don’t Allow Work to Consume Your Life

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Last week we talked about work ethic, and the need to educate our young people to work hard, take personal responsibility, and say “no” to the entitlement mentality. All important!

 

On the other hand, there is an equally insidious trap we want to help them avoid: workaholism.
 
My own father worked very hard at his job of coloring the bright construction paper at a Wisconsin paper mill. But when his work was done, it was done. He was able to devote his free time to family and interests by not taking his work home with him.
 
Today’s workplace is completely different. We’re now a service economy in the information age. Consequently, our work life today is much more knowledge-based and open-ended. While this makes for a more exciting work environment, it does have its downside. We tend to take our work home with us, and, if we’re not careful, it can easily consume our free time.
 

And now with our cell phones becoming virtual appendages, we’re always “on call” –a new source of overwork and distraction.

 

Don’t get me wrong. Your career will be a key component of your life. However, more than any other aspect of your life, it has the greatest risk of taking over if you’re not careful. And, if you’re a student, remember there’s more to life than your books. Your studies, too, can be all consuming if you let them.
 
If you allow your work or studies to dominate, and can’t let them go during your free time, you’ll suffer burnout and starve your relationships. (Recall from a previous blog that the most common life regret of elderly people is not spending enough time with loved ones.)
 
Always remember to stay balanced and invested in other areas of your life to keep things healthy and happy. People need you and you need them!
 
Are you able to leave your work behind and “switch off” at the end of the work day? Consider passing this along to a friend or young adult for them to consider, “tweet” it, or share it to Facebook. And please share YOUR thoughts with US by commenting below; we’d love to hear from you.