Here are my life lessons:

At every age: 1) spend less than you make. 2) don’t go overboard with things that go down in value (cars, furniture, electronics and other toys, etc.) or things with high price tags (even if they have the potential to go up in value). 3) Regularly invest whatever you can afford in mutual funds with a solid track record – especially if you are lucky enough to have a 401(k) with matching money at work – and don’t borrow or take the money out until you retire. If you change jobs, roll the 401(k) into another one if available or an IRA if not. Changing jobs is not an excuse to shoot yourself in the financial foot, keep the money growing. 4) Pay yourself first – repeat #3 monthly if not more often. 5) A pack of cigarettes or a latte a day will rob you blind – any habit that regularly costs money is something to manage or eliminate. ($2.50 spent per day for 20 years = $18,250. $2.50 invested per day for 20 years at 8% return > $41,750. for 30 years at 8% return > $103,000. And since you buy cigarettes and lattes with after tax dollars you have to earn more than you are spending in the first place. And let’s not limit this to cigs and lattes or anything you buy daily – the same principle works for any regular purchase. And be honest, you know you are throwing more than $2.50 a day away somewhere.) 6) stop watching TV commercials, even if that means cutting back on TV watching generally (advertisers know that you will buy more needless “stuff” the more you watch their sales pitches. You don’t need to buy a throw-away mop to clean your kitchen floor. The $20 spent on the mop, if invested at 8% over 30 years will grow to more than ten times that amount. Stop buying what they are pitching and you will have many $20 bills to grow ten-fold.)

When you are young: 1) buy some disability income insurance if you qualify – this provides a source of income if you can’t work (half of all foreclosures and bankruptcies are health related. And get this: 1 out of every 3 thirty year olds will have a long term health related disability lasting more than 90 days and averaging 2 years between the age of 30 and 65. That’s why there are so many health related foreclosures and bankruptcies.) and make it a noncancellable policy (not just “guaranteed renewable”). And by the way, can you afford to go 90 days without a paycheck? How about the 2 year average without a paycheck? 2) buy some life insurance to give your family a break if you don’t make it to retirement. 3) stay away from credit cards unless absolutely necessary to borrow. 4) it’s not absolutely necessary to borrow. 5) it’s still not absolutely necessary to borrow.

When you are older: 1) catch up on any of the foregoing rules as quickly as you can because you won’t believe this post until you’ve violated a couple of these rules and learned the hard way. 2) Relax and enjoy the trip – you only go this way once – and make sure you pay attention to your relationships and your health – they’re more important than any hunk of real estate owned or rented.

Thanks for letting me preach.

Do not be sucked in by the “bling generation” hype. People are buying $500K houses, Hummers, boats, Harleys, etc, and they don’t have a gold record on the billboard charts, or an NBA contract. They *DO* have mountains of debt and denial, which will catch up to them very soon.

Paying rent is not any more of a waste of money than paying interest on the mortgage or paying real estate taxes. While houses have appreciated in the past, it is not guaranteed to do so in the future. Look at what happened in Japan in last fifteen years.

Then you should be able to calculate how long it takes to get in the house at your current rate. If you can wait a bit longer than that, you should be able to set some aside each month for something like a fishtank (and the upkeep costs) or a nightstand.

Try opening your options and see if you can turn your want into a DYI project that saves you money and is a cheap event.

I’m really surprised that no one mentioned the importance of compound interest. More important than buying a house is opening an Roth IRA as soon as you can and maxing out your yearly contribution. Your savings will grow exponentially, doubling every 8-9 years if you invest wisely. If you can start in your mid-20s, you should be a millionaire by retirement.

My wife and I did something else that proved to be very important: we sat down together, added up all of our fixed expenses, looked at our non-essential expenses and decided TOGETHER how much of our income we wished to save each year. From that, we came up with a monthly amount that we were each allow as discretionary spending. The genius of this is that we made these decisions as a team, meaning that we both were both fully invested in making our new budget work. We checked our spending each month and helped each other stay within our limits by allowing one to “borrow” money from the other so that our overall spending stayed within our goals.

The most important impact budgetting had for us was to help us identify and bad spending habits. Out went the daily $4 mocha from Starbucks; out went the $7 lunches from the sandwich shop by work; out went the $40/mo. high speed cable for the $15/mo. DSL line.

We maxed out our IRAs again last year and put aside a hefty chunk in addition. But we also took three vacations last year, bought a home theater system and some nice stuff for our kitchen. We’ll buy a house eventually, when the market is more favorable, but for now we rent and live a happy life.

Yeah, yeah, etc., etc. for sure. Dude, many people have worked every day of their life since they were 16 and don’t have what you’ve been able to have because of your parent’s wealth. So many other people in this country have worked “every day of their life” since they were 16 to put food on the table, pay the rent, cover health care costs. Your “work since you were 16″ is a luxury, not a hardship and certaintly not anything that entitles you to the privledges of the life you have now.

The luxury of the life you have now is the luck of the draw of where you were born. An example of this being the benefit you have of even asking yourself the question of using your money for things or experience in the first place. If you were born to a family that could not provide for you, as I have been, then you would feel, in no time flat, the restraints of truly having to make it on your own without a support network to keep you comfortable. The restraints of where your money goes to pay all your expenses that have not been fully or partially subsidized by the people in your family. The restraints of actually having to pay off your education, your rent, your grocery bills and then to be able to buy the things that are at the level you can afford *without* their help (ie, an old car, no cell phone, you can’t eat out, you shop at a cheap grocery store, or god forbid, you have to use the foodbank like countless other “working every day of my life” Americans. See this week’s Seattle Times for an article on how many “working every day of their life” people without wealthy families are using the food bank on a regular basis.

So, good for you that you aren’t one of the completely spoiled brats out there. That’s great. But please do not use the whole working every day of your life since you were 16 to prove some sort of strength through hardship story. All that food you bought while you were in college, I’m certain you could buy because your parents were in many other ways (through gifts, tuition, loans, etc.,) taking care of your basic needs. And it sounds like to some extent still are. And will continue to in the future, the second they kick the bucket, when yet another windfall will certaintly come your way.

Still, you don’t have to feel bad that you have this privledge, although I believe that the excessive transfer of wealth through relation should be illegal, but using your “I’ve worked every day of my life” story as some sort of reason why you deserve your wealth and comfort is false. It makes you look arrogant and it’s an insult to people who have had to work to live, not to buy $10,000 computer equipment.

The best you can do to rectify this situation is drop the whole working since I was 16 bs, recognize your privledge, and then give back as much as you can without asking anything (I mean nothing, no recognition, no acknowledgement, completely anonymous) in return to people who have much, much less than you.