Grads do not worry about money

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June 7, 2013, 12:45 p.m. EDT

Don’t worry about money

Commentary: A message to high school and college graduates

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By Chuck Jaffe, MarketWatch

The problem with growing up in the household of a columnist is that everything you do becomes work fodder. And so it was that my children’s money foibles as toddlers and teens made my work easier.

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Money tips for graduates

It's graduation season and MarketWatch columnist Chuck Jaffe joins MoneyBeat with money tips for graduates that he'd give to his own daughters. Photo: Getty Images

Moreover, the one thing every columnist has in them at some point is a graduation speech; it’s one of those transitional points where we feel our lessons will be valuable.
Yet the one thing my children asked me not to write was a “graduation speech about money” for when they got out of high school; they didn’t want to put on their cap and gown and find out that people felt like their father had given their commencement address.
Now that they are in college, however, I get to give that money speech without spoiling their days (at least until someone brings it up when they are getting out of college).
So if you know someone who is graduating this year — from high school or college — or if you are above the age of 18 and want to see if you have money in the proper perspective in your life, here’s the message I would have wanted my daughters to hear, had I been allowed to share it.
If I could offer just one tip for your future, it would be to take advantage of compounding. The long-term benefits are undeniable. While I have significant doubts over whether Albert Einstein actually said that compound interest was the most powerful force in the universe or the greatest invention in human history — because he was only reported to have said those things about three decades after his death — the sentiment is one you should embrace.
Compound interest has the most impact when it is applied early and consistently, so even when you can’t afford to save, find a way to sock a little bit away. If you don’t miss that money now, you won’t be able to ignore it years from now, when it is the basis for your ability to live comfortably in retirement.
Don’t worry too much about the future, because worrying isn’t going to make it any better. But do envision the future you, the 50- and 65-and-older versions who will show up someday and ask “What the heck have you been doing with my money for all these years?”
Have something worthwhile to say to them, and know that the place where you will find the answer is in that space where you balance the pain of savings with the value of having fun spending your money now.
Money is not your goal, a fulfilling life is. You’ve heard that money won’t buy happiness — and you will find that out for yourselves in time — but it does give you choices and opportunities, and having more of those will, in time, give you comfort and peace of mind.

Stay focused on that inner happiness and not on the dollar amount. Too many people get a number in their head — a big number like, say, $1 million in life savings — and they reach that lifetime goal and could be comfortable for the rest of their days, but instead they live like a miser, fearful that each expenditure will leave them short of their target.
Don’t be the richest guy in the cemetery, be the one known for living a rewarding life.
Don’t be reckless with your money. Don’t put up with people who are.
Money problems destroy relationships, break up families and more. Take care of your money and, ultimately, you go a long way towards taking care of your family. If you’re acting sensibly around money and have it in the proper perspective, don’t let someone else change that; don’t think of it like they’re messing with your money, think of it like they are messing with your family.
Throw away your old bank statements, outdated credit-card statements and check stubs. Keep the memories of what was worth spending money on.
Unless you have a reason to keep something for tax purposes or because there’s a warranty or refund involved, chances are good you don’t need it; don’t let it clutter your life. Your life’s story is not told in the documents that show what you spent on gas last year or when you bought a pizza, or even what you spent on a vacation; keep the memories, not the detritus that comes from spending.
Don’t be afraid of making mistakes.
If you are like most high school and college graduates, you are woefully unprepared for managing your financial life on your own, which makes you pretty much like everyone who has come before you. That’s a sad statement on the quality of financial education, and not an indictment of you.
While it would be terrific if you can avoid the spending, saving and investing blunders that most people seem to have somewhere in their past, it’s also unlikely. When it comes to life and investing, success involves moving from one mistake to the next without losing your enthusiasm.
Don’t lose your idealism. One of the signs of money maturity is the ability to give some of it away. When you get to graduation, you are full of promise, not yet jaded by the many slings and arrows the real world is about to shoot at you. It’s easy to forget those ideals in the daily grind. Don’t let that happen; find the causes you want to support and be charitable.
Investing is not a competition.
The point is not to beat someone else, but to have enough to be comfortable and reach your goals. In the connected, social world we live in , you will hear a lot of people talking about how great they are at investing and how much money they have made, the risks they have conquered and more. Most of it will be horse-puckey.
It’s hard enough to do this stuff on your own; don’t waste time focusing on whether someone else is doing better or if you could have somehow squeezed just a little bit more out of a strategy that has been working for you. Doing those things only leads to mistakes, and while I have just told you not to be afraid of making blunders, don’t raise your hand and volunteer for duty on the Worldwide Congress of Stupid Investors.
Remember that what the market is doing today is not important. What it is doing over the next few decades or the rest of your life is.
The more you focus on what the market is doing at any given moment, the more you feel a need to “do something,” and it’s usually something that will hurt you over that longer, more meaningful picture.
Most adults spend too much time worrying about money; don’t do that. ... And if you can succeed in this, tell me how you did it. Giving the lessons and living them are two different things, and even the “experts” (a term I am loath to apply to myself) don’t get it right all the time.