Four time-tested rules for a strong financial future from LendingPoint’s Tom Burnside

Tom Burnside
LendingPoint CEO

With April (Financial Literacy Month) now underway, what better time to sit down with LendingPoint’s CEO Tom Burnside?  We asked him about financial tips he gives his grandchildren to help them grow up to be financially independent and successful.

1. Save Early

“There are always going to be rainy days when it comes to finances,” said Tom. “In order for you to have the ability to live with less stress, saving early is key. If you wonder if you’ve saved enough, a good rule of thumb to follow is saving one year of your principal income in the bank. That gives you the freedom to make decisions without the pressure of financial instability. Having a year of savings allows you to subsidize your income and build a financial barrier to help get you through the hard times. Of course, this takes time to build up, but unless you start saving, you’ll never get there.”

2. Live within your means

“A quick look at history can help you financially prepare you for the future,” said Burnside. With the big spike in unemployment in 2008 came the downsizing of people’s paychecks and way of life. This USA Today article highlights that the country lost almost an entire year’s worth of economic activity – nearly $14 trillion – during the recession from 2007 to 2009. Personal debt grew during this period as un- or under-employed consumers spent on credit cards beyond their means. Living within your means and building a savings account helps to prevent financial distress when the inevitable economic down-cycle occurs again.

3. Get an education

With the recession we began in 2008, a significant portion of the population went back to school to obtain additional degrees hoping to become employed again. High school dropouts got their GEDs or vocational certificates.  Folks who went straight into the workforce went to college. College graduates went back for advanced degrees. “I tell my grandchildren that the job market is not as kind to people without an education,” said Burnside. “The other thing to remember is that technology has changed lots of jobs that used to be open to folks without an education.  Today those jobs require a degree or specialized training and you don’t want to limit how far you can go. Education is the difference between surviving and thriving in today’s world.”

4. Discipline yourself financially

“Most people pay more for debt than they have to,” said Burnside. “Because they didn’t save enough money when they could have, an unexpected expense turned into an emergency financial situation. And when you’re in an emergency, you don’t have time to shop for the best deals. Make sure you have plenty of room on your credit cards.  It will help your credit score and push the cost of borrowing down if you need to do it.  Making sure you have a rainy-day fund will allow you to make better decisions about your finances in general. Living within your means and saving are the best things to do to avoid financial problems.