3 Vital Pieces of Financial Advice

If you were asked to give someone just starting out financial advice, what would your top three recommendations be? Aside from being a pleasant parlour game or something to fill the time at a bridal shower this question does something important. It forces you to think about your core financial values. Here's my advice (but read my disclaimer at the bottom of the page). I also have to say I didn't do any of these when I was young. I wish I had! It's much easier to start out right than to make changes later.

1. Live on 80% of your income from the very first job you get while you're still in school.
Give 10% to charity and save 10%, either in a high interest account or a registered retirement plan of some kind. And, if your employer offers any kind of pension match make sure you get it. If you do this from the very first time you get a paycheque you won't notice it. It will just become another deduction like income tax or (un)employment insurance. Even if you spend all the rest of your money, it won't matter.

2. Whenever you want to take on a major financial obligation "try it out" first.
Before you buy your first car find out what the payments and the insurance would be on the type of car you want. Find out how much it costs to fill the gas tank and multiply that by 2. Now set aside the sum of those amounts every month for at least 3 months. If it doesn't send your finances into a tailspin then you can take the money you've saved and use it as a down payment on a car. If not, maybe you need to find a less expensive car with better gas mileage. Or maybe you can't afford to buy at all right now. It's better to find out before you sign a 3 or 4 year contract! You can do the same sort of thing when you want to move out of your parents' home and rent an apartment, or when you want to buy your first house or go back to school.

3. Really try to figure out what you want your life to look like.
Then look at all your spending decisions from this simple point of view: Is this (whatever "this" is) moving me toward the life I want or away from it? If you value security, beauty, serenity and learning for example, would that new TV enhance any of those values? How about yet another pair of flip flops or coffee from Starbucks every morning? Why are you looking at modern condos downtown if you yearn for a garden and traditional furniture? Why are you looking for yet another retail job when you need solitude and time to be creative? If you're saving for your first house, how does eating out 3 times a week help move you towards that?

What about it? What are your 3 best pieces of financial advice?