Ten tips for financial wellness: Pack your lunch, really

Bruce BernoBy Bruce J. Berno, Miami '82

Recent college graduate:

1. Live within your means. Don’t spend more than you make, it’s as simple as that.
Get a roommate. Pack your lunch. Take the bus. It’s okay to be cool (financially).
If you can’t pay off your credit card every month, you’ve got a problem. Admit it.

2. Technology is your friend. Use a cash flow management tool available on many bank websites or use, Personal Capital or YNAB (You Need A Budget).
Many people create their own Microsoft Excel spreadsheets. Whatever works for you, use it!  

3. Make your financial decisions represent your personal values. Prioritize. You may not have taken economics, but all of us have unlimited wants and limited resources. Bombshell: You can’t have everything you want.  

4. Be charitable, but have a plan. There are a lot of people worse off than you, but don’t respond to every GoFundMe request that you get. Allocate a percentage of your income to church, United Way, alma mater or whatever passion that inspires you. Start small and increase regular giving over time.

5. Minimize debt and watch recurring expenses. Think of the total cost and not the monthly payment. Is it a priority, and can you afford it? Avoid the little recurring expenses that up to a lot over a year.  

Early Career:

1. Buying a house is not an investment, it is a personal lifestyle asset. A house is an important lifestyle decision and benefit, but don’t buy more house than you can afford and rationalize it by the mortgage interest deduction or appreciation rate.

2. Compound interest is one of the financial marvels of the world. Start saving early and regularly. Contribute to your employer’s retirement plan at least as much as needed to get the full employer match, if any. But 6 percent or so is not enough. Work overtime toward contributing 10-15 percent of your pay.  Start an IRA or other retirement plan if you are self-employed or not covered by an employer plan.

3. Start a college savings 529 plan for each of your children. Take the burden off saving for college by asking your parents to contribute to your childrens’ 529 plans. Other than you, who loves your children more than their grandparents?
Make the marvel of compound interest work for you here, too.

4. Live long and prosper, but have a Living Will and Health Care Power of Attorney just in case. These are specific to your state of residence and standard forms are available from hospitals or health care providers or via an internet search. Many states have a standard Financial Power of Attorney, which is equally important. (This is not a substitute for a Last Will and Testament that should be done by a lawyer.)

5. Live longer and prosper even more, but have disability and life insurance just in case. Disability is more likely to happen than premature death. Don’t rely on your employer plans, especially if you plan to be a self-employed someday.  Disability and life insurance are less expensive when you are younger and needed more when you get older.

Bruce J. Berno, is chief financial planner and president of Berno Financial Management, Inc. in Cincinnati.